There are very few things you can do to make your country look better than winning a medal at the Olympics. Unfortunately, the (U.S.) tax man doesn’t care about that, or he didn’t until very recently. He still wanted his cut of the money.
The problem was that Olympians get paid cash for winning by their national Olympic committees. Also, although gold medals aren’t pure gold and silver medals aren’t pure silver, they’re still worth something and therefore can be taxed. A gold medal is worth about $600, silver around $300, and poor lowly bronze didn’t get taxed because it was worth less than $5.
Then there’s the cash. The Olympics themselves don’t reward athletes, but their individual country’s Olympic programs do. According to Fox Business, an American gold medalist takes home $37,500, and gets taxed on it. In 2016 at the Rio Olympics, Michael Phelps was left with a $55,000 tax bill after winning six medals, according to Time.
Eventually, President Obama realized this was crazy and said only Olympians who make more than $1 million per year through sponsorship and whatnot have to pay taxes on their winnings (via Yahoo Finance). And since superstars like Shaun White are the exception rather than the rule when it comes to endorsements, that means most athletes no longer have to pay tax on their winnings. Just hope none of them go on to win a Nobel Prize, since that still gets a visit from the tax man.