A Canadian’s Guide to Gambling in the United States
What Happened to my Jackpot?
As a Canadian gambling at home, what you win is what you get. Winning a posted jackpot of $5,000 on a slot machine sees you walk out the door with $5,000 in cash. This isn’t the case for Canadians gaming abroad in Las Vegas, Atlantic City, or other gambling hubs in the United States. Casinos in the U.S. are obliged to withhold 30% of a Canadian’s winnings from certain games and jackpots and remit those funds to the Internal Revenue Service (IRS).
Does the withholding tax apply to ALL casino winnings?
No. Table games – such as blackjack, craps, roulette, and baccarat – are exempt from the 30% withholding tax. The tax is applied mostly to significant winnings on automated games of chance such a slot machines, video poker, and keno. The withholding tax is laid out clearly in the IRS U.S. Tax Guide for Aliens:
“In general, nonresident aliens are subject to the 30% tax on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty.”
So, you say I can get it back?
In 1997, an amendment was made to Article XXII of the Canada-US Tax Treaty that would allow some Canadian gamblers to retrieve some of the withholding tax on their winnings.
With this amendment, Taxback began processing returns for clients across Canada. Since 1997, Taxback U.S. Income Tax Services has worked with thousands of Canadian gamblers from across the country to process millions of dollars in refunds.
How does Taxback work to get a refund?
As stated in the 1997 amendment to the treaty:
“Losses incurred by a resident of a Contracting State with respect to wagering transactions the gains on which may be taxed in the other Contracting State shall, for the purpose of taxation in that other State, be deductible to the same extent that such losses would be deductible if they were incurred by a resident of that other State.”
Translation: Canadians can deduct their gambling loses in the U.S. against their winnings. If you can show the IRS that you’ve gambled more than you’ve won from your jackpot in your lifetime of casino gaming in the U.S. through a win-loss record, you can get the tax back.
It’s a lot of paperwork. Getting the refund means accurately filling out a number of complicated IRS forms including form 1040NR and obtaining a Individual Taxpayer Identification Number (ITIN) through form W-7. That’s where Taxback comes in. The accounting professionals at Taxback know how to navigate the IRS bureaucracy to get back the taxes withheld as quickly as possible while ensuring the process is followed to a T.
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Taxback can help you keep the winning streak alive.
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