Achieve Olympic Glory - Now Pay the IRS
U.S. Olympic gold medal winners could owe almost $10,000 to the IRS
As 230 U.S. Olympic athletes gear up to compete in the 2014 Winter Games, the only thing colder than the slopes at Sochi is the fact that any prizes awarded by the U.S. Olympic Commission (USOC) will be taxed by the IRS. Many Americans don't realize that the U.S. taxes income earned abroad, and as such even the winnings of Olympic athletes are subject to the reach of the IRS.
The USOC awards prizes to U.S. Olympic medal winners: $25,000 for gold, $15,000 for silver, and $10,000 for bronze. Relative to each athlete's income tax bracket, some top earners such as Shaun White could end up paying over a third (39.6 percent) of their winnings to the IRS.
Additionally, because the U.S. is one of only a handful of developed countries that tax income earned abroad, it is likely America's competitors will not be subject to such a tax. Taken together - the tax on Olympic athletes and the tax on income earned abroad - it can be said the U.S. has officially "earned the Gold" for having one of the most backwards and illogical tax codes in the world.
U.S. Tax Rates per Bracket
Max. Tax Liability on Gold Medal Prize of $25,000
Max. Tax Liability on Silver Medal Prize of $15,000
Max. Tax Liability on Bronze Medal Prize of $10,000
Americans for Tax Reform has calculated the federal income tax medal winners could potentially face. It will vary depending on which marginal income tax bracket the athlete finds himself in for 2014. The amounts below represent only the federal income tax liability, and do not account for income taxes owed in most states.
For gold medal winners, ATR believes applying the top marginal income tax bracket of 39.6 percent to gold medal winners is reasonable for the following reasons:
•Gold medal winners (as opposed to silver and bronze medal winners) are likely to have marketing, endorsement, speaking, etc. deals in 2014, and should have higher-than-usual earnings
•Because state income taxes are not being calculated, there is a margin of error built into the methodology
Read more: http://atr.org/achieve-olympic-glory-pay-irs-a8135#ixzz2sj4LB9JB
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