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According to the Americans for Tax Reform, prize money and medals won by United States athletes at the Olympics are subject to income tax. Alex Knight is a tax partner for Habif, Arogeti & Wynne. He said, “It’s no different from winning Wheel of Fortune or the lottery.” CNN said that a gold medal is worth $650, which means an athlete would have to pay $236 in taxes for it. A bronze metal comes with a cost of $5, so an athlete will only have to pay $2 in taxes for the metal.
Athletes from the United States will be awarded $25,000 for winning a gold medal by the U.S. Olympic Organizing Committee. Athletes who win a silver medal will be awarded $15,000 and athletes who win a bronze medal will be awarded $10,000. Athletes who win gold will owe the government $8,750 because of a 35 percent income tax rate. Silver medalists will owe the IRS $5,250 and bronze medalists will owe the IRS $3,500.
Athletes were worried about the tough tax laws in Britain prior to the Olympic Games. Those laws allow the British government to take a large chunk of money from international athletes competing in Britain. These tax laws caused tennis player Rafael Nadal and golfer Sergio Garcia to abstain from taking part in tournaments played in Britain recently. Prior to the Olympics, taxing authorities in Britain placed an exemption on the law for the 2012 London Olympics and the athletes. The authorities were worried that too many athletes would refuse to compete because of the tax laws.
