Michael Phelps likely won't be smiling as big once he gets the IRS bill for his gold medals. (Getty Images)
Gold, silver, bronze and taxes. For the American Olympians in London, winning a medal at the world's most prestigious sporting event will not only earn their country national pride but a few dollars in Uncle Sam's coffers as well.
According to the Americans for Tax Reform Foundation, athletes are liable to pay income tax on medals earned the games. That means earning a gold medal could mean paying its weight in, well, gold.
American medalists face a top income tax rate of 35 percent. Under U.S. tax law, they must add the value of their Olympic medals and prizes to their taxable income.
In addition, prize money the U.S. Olympic Committee gives out for earning each medal -- $25,000 for gold, $15,000 for silver, $10,000 for bronze -- is currently taxed as well. As much as earning Olympic glory means to the athletes themselves, it looks like their wallet could be a tad lighter than it should be once they return from overseas if they don't check with their CPA first.
Not only do our Olympic athletes have to pay taxes on their medals and prizes – chances are their competitors on the field will face no such taxation when they get home. Because the U.S. is virtually the only developed nation that taxes “worldwide”income earned overseas by its taxpayers, our Olympic athletes face a competitive disadvantage that has nothing to do with sports.
Florida Sen. Marco Rubio believes the taxation is pretty stupefying and introduced a bill on the floor Wednesday that would eliminate the tax American athletes must pay for their work in London.
"Athletes representing our nation overseas in the Olympics shouldn't have to worry about an extra tax bill waiting for them back at home," Rubio said in a statement about the Olympic Tax Elimination Act.
We'll see if the bill can make its way through the legislative process before the Closing Ceremonies because at the moment, current Americans competing in London would owe the IRS $8,986 for winning a gold, $5,385 for a silver and $3,502 for a bronze according to the report.
Swimmer Michael Phelps made history on Tuesday by taking home his 19th medal to become the most decorated athlete at the games in history and has ponied up his fair share of tax money over the years. Using those tax estimates, the Maryland native has paid as much as $132,808 to Uncle Sam so far for his 14 golds and 2 bronze medals earned prior to London. Toss in the three medals he's earned in 2012 and the total bill jumps to $152,564 and counting.
The ATR, which opposes tax increases "as a matter of principle," adds that because the U.S. is one of few countries who tax on income earned overseas by its taxpayers, winners from most other countries won't be paying taxes on their prizes.
Politifact points out, however, that athletes can reduce the tax hit by deducting any unreimbursed business expenses (traveling, equipment, etc.) from their bonus. Additionally, the 35 percent tax rate applies to athletes who make at least $380,000 a year.
CBS News contributed to this report.