The Winter Olympics and Tax Season: A Match Made in..Sochi?

We’re excited about the winter Olympics. We’re also stoked that we are in tax season. So naturally, as a tax company, we look at how the two fit together. (Hey, we made the tax connection to football and wrestling!) Here are five tax facts American Olympians should know:

  • Since most Olympians are amateurs, meaning they do not get paid for their athletic prowess at the Olympics, the cost of training is not a tax deduction. 
  • However, should a U.S. athlete medal in the games, the money paid for each medal is taxable income, and must be reported on the athlete's tax return as "Other" income.
  • If the athlete receives sponsorships from a corporation in exchange for advertising that corporation’s products, those sponsorships may also add up to taxable income. Come tax time, they may be able to deduct their associated spokesperson expenses as a business income.  
  • Some people believe in an athlete so much, they will give their personal money as sponsorship money. Any money an athlete received from an individual is considered a gift and is not taxable.  But that works both ways—the donor can't deduct the sponsorship as a charitable contribution and may have to file a gift tax return if the gift was greater than $13,000.
  • Athletes need to stay in tip-top shape when training, and unfortunately, sometimes injuries occur. Medical expenses the athletes pay are deductible, although there are limits.  The tax laws require taxpayers to deduct 10 percent of their adjusted gross income from the total medical expenses paid and only the remainder is allowed as a deduction.  
And those are just a few things off the top of our heads! Good luck to all the U.S. athletes! Bring home the Gold!