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The price of gold in Rio

Winning an Olympic medal may not be as rewarding as it appears. Olympians make great sacrifices to qualify for their teams, yet there may still be a price to pay. The Internal Revenue Service taxes the value of the gold, silver, and the reward money athletes make each time a medal is won.

The U.S. Olympic Committee awards the athlete based on their
placement. First place is worth $25,000, second place $15,000, and third place is worth $10,000. If the Olympics were to make gold medals entirely of gold, at the current weight each medal would require more than $21,000 worth of metal, said USA Today. The medals are not solid gold, but silver with a gold overlay. The gold is estimated to be worth $565 while silver is worth about $305. Bronze is worth a negligeble amount so it’s not taxed, according to CNN Money. For example, Michael Phelps could owe approximately $55,000 in taxes from his five gold medals and silver medal from the Rio 2016 Olympics.
The U.S. Olympic team not only must pay federal and state taxes on their earnings from their gold and silver medals, but they also aren’t provided with government funding for their travel expenses and unpaid leave from work during their visit to Rio de Janeiro. Most athletes are not fortunate enough to have an endorsement from a company to completely cover these expenditures, and instead must rely on the sponsorship of local businesses or income from their day jobs back in their home state.

Many nations don’t tax their Olympians, but some countries, such as Britain, don’t give their contestants prize money at all. Steven Gill, a tax professor at San Diego State University, told CNN that American athletes receive a fraction of the financial support of athletes in other countries.

“When I think about why these prizes exist, it’s to compete with state-supported athletes from other countries. Cutting taxes isn’t going to fix the fact that these athletes don’t get paid enough—it’s a short-term fix,” said Gill to CNN.

The U.S. Congress has proposed bills to give the athletes tax breaks, but these bills have yet to become a reality. According to NBC, accountants suggest there could be a way around the tax in question if Congress does not support the exemption. They suggest if the contestant treats his or her sport like a business on income paperwork, then some expenses may be deducted such as travel, training and equipment.

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