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The Sochi Olympics begin Friday, and Americans will be cheering on Team USA to bring home the gold (and the silver, and the bronze). But lest Olympic athletes forget, they're still responsible for paying income taxes after winning their medals.
Sure Uncle Sam is patriotic, but he won't let members of the U.S. Olympic Team keep their winnings tax-free. Champions will generally still have to report their income -- i.e., the value of their medal and the cash prize that comes with it -- and pay taxes to the IRS.
With the IRS rolling out revised tax brackets for the 2014 tax year, how much will medalists potentially have to pay?
Calculating Taxes for a Medal
To figure out the taxes for winning a single medal, we'll need to know the value of a medal and the tax rate for various income levels.
For U.S. athletes, prize money varies depending on the type of medal they win. This year, it's $25,000 for a gold medal, $15,000 for silver, and $10,000 for bronze, according to Radio Free Europe/Radio Liberty. That's apparently unchanged from the Summer Games in 2012.
The bad news for athletes: The IRS' tax brackets for 2014 call for a slightly higher tax rate for the highest income earners, compared to what Olympic medalists in 2012 had to pay. In 2012, the highest income earners fell into a 35 percent tax bracket. For the 2014 tax year, the highest earners will fall into a 39.6 percent tax bracket, Forbes reports.
Potential Taxes by Medal Type
With the lowest and highest tax brackets in mind, here's a breakdown of the minimum and maximum taxes that U.S. Olympians may have to pay for winning a single medal:
Of course, just like other taxpayers, U.S. Olympians may be able to claim deductions and otherwise try to reduce their overall tax bill. So after medaling in their sport, they may want to go for the gold by consulting an experienced tax lawyer.
A final note on this topic: You may recall that during the Summer Olympics in 2012, some politicians proposed a bill that sought to do away with medal taxes for Olympic athletes. That bill, however, never made it out of committee, according to the Library of Congress.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.