How Olympians Can Go Broke!

When athletes proudly stand on the Olympic podium with medals around their necks, the culmination of years of dedication, training, and sacrifice is evident to the world! ?What’s less visible is the financial aftermath- meaning how U.S. Olympians are compensated and taxed for their achievements. The journey to Olympic glory involves more than just physical and mental exertion; it also has major financial implications.

Unlike many countries, such as China and Cuba which directly fund their athletes’ training and support, the US athletes rely on a combination of private sponsorships, personal fundraising, and the athletes’ own resources. However, the United States Olympic & Paralympic Committee (USOPC) does provide monetary rewards for athletes who earn medals. ?In Cuba, if you medal, the government covers your costs for the rest of your life!

As of the Tokyo 2020 Olympics, U.S. athletes receive $37,500 for a gold medal, $22,500 for a silver medal, and $15,000 for a bronze medal. These payments are considered “bonuses” and are intended to help athletes offset the significant costs associated with competing at the highest level.? These “bonuses” have NOT been indexed for inflation!

Historically, these bonuses, along with the actual cost of the actual gold, silver, and bronze inside the medals were subject to federal income tax. This situation puts some athletes in a difficult financial predicament! ?Imagine winning a gold medal, only to face a hefty tax bill that you might not be fully prepared to pay. In some cases, athletes could find themselves owing thousands of dollars to the IRS simply because they excelled in their sport.

This tax treatment led to public outcry and calls for change, particularly after the London 2012 Olympics. The idea of penalizing athletes for their success didn’t sit well with many Americans. In response, Congress passed the United States Appreciation for Olympians and Paralympians Act in 2016. Under this law, the bonuses earned from Olympic and Paralympic medals are exempt from federal income tax, provided the athlete’s gross income is below $1 million that year. For athletes earning above this threshold, the bonuses remain taxable.

Although the federal government provides this exemption, state taxes are another matter. Some states, like California and New York, have high state income taxes that can still affect an Olympian’s earnings. Athletes residing in such states may still see a portion of their winnings going to the state tax authorities, though some states have passed legislation to exempt Olympic bonuses from state taxes.

For most Olympians, the medal bonuses are just one part of the financial equation. Many rely on sponsorships and endorsements, (which were down this year) which can be substantial for high-profile athletes like swimmers, gymnasts, and track stars. These earnings are fully taxable, and the tax burden can be significant, especially for those who experience a short-lived surge in income following the Games.

The cost of training, travel, coaching, and equipment can be immense, and not all Olympians receive enough in bonuses and endorsements to cover these expenses. Some athletes take on debt or rely on the support of friends and family to make ends meet!

In conclusion, the financial landscape for U.S. Olympians is complex! ???While winning a medal is an incredible achievement, it comes with financial responsibilities that the public often overlooks. The tax exemption on medal “bonuses” has alleviated some of the burdens, but athletes still face a myriad of financial challenges. As they continue to pursue excellence, it is important to recognize and support their efforts not just on the field, track, or pool, but also in managing the financial realities that accompany their Olympic dreams.

The USA won, by far the most medals with 126, 35 more than China, who tied us with 40 gold medals.? Bravissimo USA, and onto Los Angeles in 2028!? I hope to be there live and share my experiences with you!