The price of gold: Taking first place in Olympics could cost US stars as much as $10G in taxes
{{#rendered}} {{/rendered}}Feb. 8, 2014: U.S. Olympic gold medal winner Sage Kotsenburg in Sochi, Russia. (AP)
An athlete who wins gold at the 2014 Olympic Games under way in Sochi, Russia, stands in line to pay $10,000 to Uncle Sam.
The U.S. Olympic Commission awards cash prizes to Olympians who win a medal -- $25,000 for a gold, $15,000 for a silver and $10,000 for a bronze. But the money is considered earned income abroad and subject to IRS taxation.
“The only thing colder than the slopes at Sochi is the fact that any prizes awarded by the USOC will be taxed,” writes the group Americans for Tax Reform, which has calculated the federal tax that medal winners could face.
{{#rendered}} {{/rendered}}The group also argues the United States is one of only a handful of developed countries that taxes such income, which means other Olympic competitors will likely not have to pay such taxes.
“The U.S. has officially ‘earned the gold’ for having one of the most backward and illogical tax codes in the world,” the group said.
The marginal-income tax bracket into which an Olympian falls would decide how much he or she must pay. And the amounts do not take into account income taxes owed in most states.
{{#rendered}} {{/rendered}}U.S. stars such as snowboarder Shaun White, a former gold medalist with a signature clothing line, or alpine skier Bode Miller, a five-time Olympic gold medalist who is reportedly worth millions, are in the top 39.6 percent tax bracket. So they could pay as much as $9,900 should they repeat gold this month.
All Olympians in that bracket also could pay $5,940 for a silver and $3,960 for a bronze medal.
The tax group, perhaps surprisingly, argues applying the top bracket to gold medal winners is “reasonable,” considering they are likely to have marketing, endorsement, speaking and other such deals in 2014. So they should have higher-than-usual earnings.
{{#rendered}} {{/rendered}}The debate about whether Olympians should be subject to the taxes often resurfaces at the start of the winter or summer games.
On Tuesday, Texas GOP Rep. Blake Farenthold re-introduced legislation -- the "Tax Exemptions for American Medalists (TEAM) Act" – that would exempt U.S. Olympic athletes from paying taxes on the medals and the accompanying money.
"This needless tax illustrates how complicated and burdensome our tax code has become," he said. “We need a fairer system for all, and eliminating this unnecessary tax burden on our athletes is a good way to start.”
{{#rendered}} {{/rendered}}During the 2012 presidential campaign, Republican nominee Mitt Romney and President Obama backed a similar Senate proposal.
An Olympian in the 28 percent bracket, about the middle range, could pay as much as $7,000 for a gold, $4,200 for a silver and $2,800 for a bronze medal.
Those is the lowest -- the 10 percent bracket -- could pay $2,500 for a gold, $1,500 for a silver and $1,000 for a bronze medal.