By Daniela Cambone of Kitco News
(Kitco News) – Being the greatest athlete of all-time may come at a high price. Michael Phelps might be paying $55,000 in taxes for his five golds and one silver, won during this year’s Olympic Games in Brazil.
According to the organization Americans for Tax Reform, the U.S. Olympic Committee grants its medalists with more than the actual medals. The athletes receive cash prizes — $25,000 for gold, $15,000 for silver, and $10,000 for bronze. But the IRS considers these amounts to be regular income, subject to taxation. “A gold medalist from Team USA could end up facing a tax bill of $9,900 per gold medal, $5,940 per silver medal, and $3,960 per bronze medal,” says the organization. These are the maximum possible tax amounts, and vary widely based on an individual’s tax circumstances and available deductions, the organization stressed.
The medals themselves are also taxed — based on the commodity prices of the metals involved.
According to Victor Hugo Criado Berbert, production manager of the Olympic medals at the Brazilian mint, the medals are only about 1.2% gold. Speaking with Kitco News in July , he said the gold medal is made up of 494 grams of silver and only 6 grams of gold. Nearly 100 grams heavier than the 2012 London Olympic medals, Berbert noted that the 2016 Rio Olympic medals weigh 500 grams each.
At current prices, with gold trading roughly at $43.04 a gram and silver at $0.63 a gram, the gold medal is worth $569.46. The silver medal is worth about $315.
Americans for Tax Reform brought the issue to the public’s attention during the 2012 Olympics. At the time, Sen. Marco Rubio (R-Fla.) introduced The Olympic Tax Elimination Act to protect U.S. athletes from getting taxed. The bill called for IRS code to be changed so that the gross income of U.S. medal winners “shall not include the value of any prize or award won by the taxpayer in athletic competition in the Olympic Games.” The bill died however.
This year, Sens. John Thune, R-S.D., and Chuck Schumer, D-N.Y., sponsored a similar bill to eliminate taxes on Olympic and Paralympic athletes. The bill passed the Senate in July.
As for Phelps’ medals — it is difficult to put a price tag on the intrinsic value of these exclusive sporting awards, not to mention the potential endorsement and sponsorship deals a lot of the Olympic medalists get post-games – so paying his taxes should not come as a problem. Phelps’ net worth stands at around $55 million, and Forbes puts world-record holder Usain Bolt’s net worth at over $32 million.
By Daniela Cambone of Kitco News; email@example.com
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