When a US athlete wins a gold medal at the 2014 Winter Olympic games, the US Olympic Commission gives a cash reward to go along with the medal. Medalists receive a $25,000 bonus for a gold medal, a $15,000 bonus for a silver medal and a $10,000 bonus for a bronze medal. While this may seem like a nice bonus, it doesn’t come close to what some other countries pay. A gold medal in Kazakhstan is worth a cool $250,000 bonus, and a Russian gold medalist this year will get more than $100,000.
The US medalist won’t be able to spend all of their bonus, however, because Uncle Sam will claim a portion of it. Unlike many other countries, the US considers the Olympic medal bonuses as earned income in a foreign country, which is considered taxable income by the IRS. How much each medal winning athlete will need to pay in Federal taxes depends largely on their income level. They may also be liable for state taxes if they live in a state with an income tax.
When it comes to the star athletes who already earn big salaries from endorsements and other related business opportunities like Shaun White and Bode Miller, they will likely find themselves in the top federal tax bracket of 39.6% for any medal bonus money they earn. That means if they win a gold, approximately $9,900 of the $25,000 will go to Uncle Sam. A silver medal will see $5,940 from their $15,000 bonus go to the IRS, while $3,960 of the $10,000 bonus will disappear for any bronze medals they happen to win.
Those American medalists that have their income fall into the middle range will see their medal bonuses taxed at 28%. In this case, $7000 would be taken away by the IRS for a gold medal, $4,200 for a silver medal and $2,800 for a bronze medal. For those athletes whose income falls into the lowest bracket, the tax cost will come to $2,500 for a gold, $1,500 for a sliver and $1000 for a bronze.
There have been bills introduced by congress that would make the Olympic medal bonuses tax free, but none of them have even come up for a vote, let alone pass. President Obama has indicated if such a bill ever came to his desk, he would both support it and sign it.