Recovery of US casino jackpot tax withholdings
August 5, 2009 9:00 AM   Subscribe

As a Canadian, how do I recover gambling tax withholding from winnings at Las Vegas casinos?

I know there are plenty of companies out there who will recover withheld gambling winnings tax for a ridiculous cut of the rebate (30%), I used one the last time I had a jackpot win. Just wondering if there is a step by step way to do it myself? I already have my US Individual Taxpayer ID number (ITIN), what's next?
posted by albertagirl to Work & Money (8 answers total)
 
You could contact the LV tourism commission to see if there is perhaps a form you could fill out, like when foreign tourists depart Canada do to receive their GST rebate.
posted by KokuRyu at 9:06 AM on August 5, 2009


Was it federal or state tax that was withheld? If you don't owe taxes to the US/LV, then I'd think you could just fill out a tax return between Jan 1 and April 15 and claim a refund. If you do in fact owe taxes, then you'd still fill out the return, but you may be able to claim a foreign tax credit on your Canadian taxes. For US citizens, you can credit taxes paid to foreign governments against your US tax liability. Unless a special treaty exists exempting you from the US/LV taxes on gambling winnings, then you probably do owe some/all/more than the taxes withheld.

Your normal Canadian tax preparer should be able to help you with this.

If I find any specific forms/links, I'll post them in a follow up.
posted by melissasaurus at 9:15 AM on August 5, 2009


Best answer: Page 27 of IRS Publication 515 provides some information. Additionally, this page has some Canada-specific information and might be a little more on-target to your question.
posted by lorrer at 9:18 AM on August 5, 2009


From the IRS:

"Gambling winnings of Canadian residents are subject to NRA withholding at 30 percent on the gross proceeds from gambling winnings in the United States. However, Article XXII of the Canada - U.S. Income tax treaty entitles residents of Canada who are taxable by the United States on gains from wagering transactions to deduct U.S. source losses from U.S. source wagering transactions. Canadian residents should file Form 1040NR (PDF) to obtain a refund of U.S. taxes withheld from the gambling winnings, if applicable."
posted by melissasaurus at 9:21 AM on August 5, 2009


Best answer: There is a special treaty, but you will only get a partial refund based on your net winnings (when what was withheld was probably just based on your gross winnings which didn't take into account any losses). See page 28 of the 1040NR (nonresident aliens).
posted by bluefly at 9:24 AM on August 5, 2009


Not sure what you mean about companies recovering withheld tax on gambling winnings, nor do I know what rebate you are referring to, so this may not help. I'm not an expert on non-resident taxation, but I do know the basics.

I'm assuming thought that you are a Canadian citizen, won some money at a casino in the US and had federal taxes withheld at a 30% rate.

If this is the case, then any income you earn in the US is taxable in the US. There are not really any "loopholes" to get around this. However, if you had gambling losses, then they offset your gambling winnings. File a US tax return and report how much you won and lost, and you will get a refund. Go to IRS.gov, find the non-resident individual income tax return and fill one out. You will also want to print out the instructions to the form/return and read them. It should not be that hard, but you may have to read through those instructions pretty carefully.

Like someone else said, a CPA or the equivalent in Canada should be able to help you very easily on this, and it should not cost much at all. I could be wrong on this, but I am pretty sure HR Block and companies like that bill their clients a flat fee and not based upon a percentage of the refund received by the taxpayer.

From a tax practitioner's perspective, I can tell you from my experience that I have seen very few tax returns where someone did not have gambling losses that completely offset their gambling winnings.
posted by stevenstevo at 9:36 AM on August 5, 2009 [2 favorites]


The twoplustwo forums are a goldmine for this information. One quick result here. From this, and contrary to what stevenstevo says:

My father is an accountant, & wasn't familiar with american' taxes. So he has made his small investigation. He has found that there was a treaty between Canada & the US named : Convention Between Canada and the United States of America With Respect to Taxes on Income and on Capital ( http://www.fin.gc.ca/treaties/USA_e.html ) especially article XXII & XXV, that make in sort that as a canadian citizen; I don't have to pay federal taxes in the US.

It's not _exactly_ the case but you can find tons of info and advice in that thread. As you may imagine it's a recurring topic.
posted by splice at 10:28 AM on August 5, 2009


BTW I'm not saying that stevenstevo is wrong, just that opinions differ, and there may very well be a way to get all your withheld winnings back. As he said: "I have seen very few tax returns where someone did not have gambling losses that completely offset their gambling winnings."
posted by splice at 10:29 AM on August 5, 2009


« Older Name that busk   |   What's Fun for Teenagers in San Francisco? Newer »
This thread is closed to new comments.