The World Cup–winning side will make $50 million — and the IRS gets a cut
“It doesn’t make a difference who wins the game. The IRS will get a piece.”
The US Women's National Soccer Team's World Cup win is not only a historic achievement but also a lucrative one, with the team set to earn $50 million in prize money. However, a significant portion of that windfall will go to the US government in the form of taxes.
This is not unique to the US team, as athletes and sports teams have long been subject to taxation on their winnings. The IRS has specific rules regarding the taxation of prize money, with the general principle being that prizes and awards are considered taxable income. In the case of the World Cup, the prize money is considered taxable, and the team's earnings will be subject to federal income tax.
What's worth watching next is how the team's earnings are structured and allocated. Will the players take their earnings as a lump sum, or will they opt for a structured payment plan? Additionally, will the team or individual players consider charitable donations or other tax-advantaged strategies to reduce their tax liability? The team's financial planning and tax strategy will be an interesting aspect to follow in the coming months.
Originally reported by marketwatch.com. FundNews adds analysis for finance & markets readers.