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Sochi Olympics

Olympic Medal? Well Done, Now Pay Your Taxes: Uncle Sam

Those medals Americans have been winning at the Winter Olympics in Sochi come with a price. Uncle Sam wants his percentage, whether it's gold, silver or bronze.

The U.S. Olympic Committee awards cash prizes to medal winners ─ $25,000 for gold, $15,000 for silver and $10,000 for bronze. But the money is considered earned income abroad and subject to IRS taxation ─ as much as 39 percent.

That's why some politicians have revived a bill introduced in Congress at the time of the Summer Games in London to exempt those Olympic winnings as earnings. The bill never even came to a vote in 2012.

According to Americans for Tax Reform, a group supporting the bill, those in the top tax bracket — like skier Ted Ligety, ice dancers Meryl Davis and Charlie White, or any U.S. hockey player — will pay 39.6 percent, or $9,900, on a gold medal — while those in the bottom tax bracket will pay 10 percent, or $2,500, for a gold.

Many other nations do not tax Olympians for their medal prizes and some, such as Britain, don't give their medalists cash prizes at all.

However, accountants suggest there could be a way around the tax question, if Congress does not support the exemption. If an athlete treats his or her sports activity as a business, then related expenses might be deductible. So all of those training expenses, the cost of travel and equipment could be deducted against income.