Tax Concerns of Present and Future Olympic Athletes

The 2021 Tokyo Olympic Games have officially begun. Athletes from all over the globe will participate in various events seeking to bring home victory. The International Olympic Committee will award medals, but not cash prizes, to the victorious athletes. However, certain countries, including the United States, do award cash prizes to their athletes who medal. This may lead to several questions about taxation, such as how these cash prizes will be taxed, and what other tax-related concerns these athletes should be aware of.

The United States Olympic & Paralympic Committee (USOPC) is in charge of awarding cash prizes to American athletes who win gold, silver, or bronze medals. There is no cap on the amount an athlete can earn in a single Olympics. While these cash prizes, along with the cash value of Olympic medals, typically would be considered taxable income under the Internal Revenue Code, the United States Appreciation for Olympians and Paralympian’s Act, enacted in 2016, amended Section 74 of the Internal Revenue Code to exempt from taxation all prize money and the cash value of any medals received in relation to participation in the Olympic or Paralympic Games. However, this exemption is available only to athletes who have an adjusted gross income under $1 million.

Another benefit for Olympic athletes participating in the Tokyo Olympics is they do not need to be concerned about international taxation issues. Japan exempts from its own income tax any non-resident athlete who earns an award for participating in the Tokyo Olympics/Paralympics. The Tokyo Organizing Committee of the Olympic and Paralympic Games has issued a Tax Guide explaining the specific exemptions related to these Olympic Games.

Olympic athletes also have the ability to earn income through endorsements. It is important for them to understand that their endorsement income, subject to permitted deductions for ordinary and necessary business expenses, likely is subject to both income and self-employment taxes, and to plan accordingly. The taxation of endorsement income is now relevant to NCAA athletes as well due to recent changes in NCAA policy that allows NCAA athletes to monetize their name, image, and likeness.



Now more than ever, it is imperative that athletes, including college athletes and Olympians, understand federal, state, and international income taxation and plan accordingly.

If you would like more information about this topic, or any other tax issue, contact attorney Joshua Nesser at jnesser@lavellelaw.com or 847-705-7555.