Because the US Olympic Committee hands out cash bonuses to medal winners, these bonuses, and those bonuses are considered taxable income by the IRS.
Senator Johnny Isakson has co-sponsored a bill that would remove the value of the medals themselves, along with the prize money athletes win in the Olympics or Paralympics, from the athlete’s gross income. Any earnings from sponsorships or endorsements as a result of their success would remain taxable. The bill was sponsored by Senator John Thune of South Dakota.
Isakson issued this statement:
I congratulate all of our Olympic and Paralympic medalists who have dedicated their own time and money to compete on behalf of our nation. They should be welcomed as heroes, not handed a tax bill, when they return home from competition. This legislation is just the right thing to do.
According to Isakson, if the bill passed, the United States would join the majority of developed countries in exempting Olympic medal-winning athletes from taxation on their awards. The bill would be made retroactive to cover medals won at the Sochi Games.