Kathryn Zdan, EA
A room filled with tax pros, furiously entering data into software, the hushed voice of the announcer crackles with suspense… who will finish first? Who will most quickly and accurately pump out a K-2 and K-3 for a domestic partnership with a partner filing Form 1116, while also placing the temporary partnership number in the correct place on the California return, and getting the fewest diagnostic errors? Oh dear, it looks like one contender was disqualified for pairing socks with flip flops… office attire counts towards the final marks. (Honestly, though, this does sound more interesting than watching skiathlon.)
Tax prep can generate more sweat than a curler sweeping the hammer for a takeout and the win, and the “tax athletes” would have the added bonus of knowing exactly how to treat the income that comes along with their winning medals.
In addition to their medals, winning U.S. athletes take home per-medal bonuses for their wins: They get $37,500 for gold, $22,500 for silver, and $15,000 for bronze. Depending on their income level (which is in the millions for certain athletes like snowboarders Shaun White and Jaime Anderson), this could mean a tax bill for the privilege of being the best in the world.
However, there is a federal exclusion for the value of any medals or other prizes awarded to Team USA athletes during the Olympic and Paralympic games for those athletes whose adjusted gross income does not exceed $1 million ($500,000 for a married individual filing a separate return).1
But Olympic athletes — most likely — are in the business of being an athlete; their income can be offset by the ordinary and necessary business expenses of things like travel, coaching, and equipment. So, for many Olympians, these expenses could easily offset the $37,500 that comes with a gold medal.
So is it a blessing or a curse that our athletes don’t get paid as much as athletes from other countries? Hong Kong paid its gold-winning fencer in the last summer Olympics $642,000, and in Turkey, a gold medal comes with $383,000 — although so far dangling this number in front of Turkish athletes has yet to net a medal in the Winter games.2