Casino Winning Tax Canada
U.S. Gambling Tax Recovery
There are no income taxes on Canadian lottery winnings for Canadian citizens. Canadian tax authorities do not consider lottery earnings to be taxable for purposes of Canadian income tax. Winners are required, by American law, to report their tax earnings to American authorities. Unfortunately the casinos are required to withhold a 30% gambling winnings tax on certain gambling winnings. The good news is that for Canadians and some other international citizens. Casino Tax Recovery can help you recover this casino winnings tax. Often the full amount may be recovered with a US Tax Recovery service. Casino Tax Recovery will. If you get a 1099 for Gambling winnings, the IRS will allow you to write off any gambling LOSSES up to that amount. So, for 2015, if you won 10,000, got a 1099, and took a vegas trip and lost 10,000, you would have a zero tax liability on that amount. If you're a Canadian gambling in the United States it's really important to understand the rules around taxes. That's because when you win, you may be subject to a 30% withholding tax on your winnings. Canada and the US have a special tax treaty that includes the IRS taxing Canadians who win money gambling in America. It’s safe to say that a person in Canada winning a lottery prize or winning at a game of pure chance (e.g., craps, roulette, or slots) is not subject to Canadian income tax on those receipts and, in fact, no modern reported case that I am aware of has found such receipts to be taxable.
Author: Brad Howland
First Posted: Jan. 2, 2007
Canadians who gamble in the United States may find that 30% of their winnings are withheld to cover U.S. non-resident's tax. Under certain circumstances, this tax can recovered by filing a U.S. tax return.
The IRS requires casinos and other gambling establishments to withhold 30% of the gambling winnings of Canadian visitors to the U.S. However, if you also have U.S. gambling losses during the year, it is possible to file a 1040NR return, deduct those losses from your winnings, and receive a refund of the tax withheld. You must have received 1042-S forms (or W-2G forms) from the gambling establishments showing income and tax withheld, and you must be a U.S. non-resident, for this procedure to work.
You must also have records to substantiate your losses. The IRS provides the following guideline on their website: 'It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.'
Your diary should record the date, location, and type of your gambling activities, as well as amounts won or lost. These records do not have to be submitted with the tax return, but must be available if requested by the IRS.
If you have winnings from blackjack, baccarat, craps, roulette, or big-6 wheel, and the casino gave you Form 1042-S showing that tax was withheld, you don't require gambling losses to claim a full refund of the tax.
The tax refund is obtained by following two basic steps:
1. Obtain an ITIN Number
If you do not have a U.S. Individual Taxpayer Identification Number (ITIN) you need to apply for one by submitting Form W-7 to the IRS along with your tax return. The application process requires you to submit certain documents as proof of identity and foreign status:
IRS has streamlined the number of documents the agency will accept as proof of identity to obtain an ITIN. There are now 13 acceptable documents.
An original, or a certified or notarized copy, of an UNEXPIRED passport is the only document that is accepted for both identity and foreign status. If you do not have a passport, you must provide a combination of current documents that contain expiration dates - we accept docs issued within 12 months of the application if no expiration date is normally available. The documents must also show your name and photograph, and support your claim of foreign status.
IRS will accept certified or notarized copies of a combination (two or more) of the following documents, in lieu of a passport:
- National identification card (must show photo, name, current address, date of birth, and expiration date)
- U.S. driver's license
- Civil birth certificate
- Foreign driver's license
- U.S. state identification card
- Foreign voter's registration card
- U.S. military identification card
- Foreign military identification card
- Visa
- U.S. Citizenship and Immigration Services (USCIS) photo identification
- Medical records (dependents - under 14 years old - only)
- School records (dependents and/or students - under 25 years old - only)
(Source)
Naturally, you probably don't want to send original copies of your documents to the IRS. Although it possible to send certified or notarized copies, there is a catch: copies must be certified by the 'issuing agency or official custodian of the original record,' or 'notarized by a U.S. notary public legally authorized within his or her local jurisdiction to certify that the document is a true copy of the original.' For Canadian residents who don't want to travel to the United States just to find a notary, U.S. notaries public are available at U.S. embassies and consulates in Canada.
In our practice we have used the notary services available at the Vancouver Consulate General, with good success and a reasonable turn-around time. However, it may be more convenient for you to drop into the nearest Canadian passport office and have them make a certified copy of your passport. At the time of this writing, it is free and seems to take about a week to get ready.
Alternatively, if you don't want to go through the somewhat onerous process of applying for an ITIN by yourself, you can use an official IRS 'Certifying Acceptance Agent.' An Acceptance Agent is authorized by IRS to assist individuals in obtaining ITINs, and will probably charge a fee for the service provided. The IRS posts a list of Acceptance Agents on it's website. The list is updated quarterly, and many are located in Canada.
2. Prepare the 1040NR Return
ITIN applications on Form W-7 are required to be submitted to the IRS with the tax return as an accompanying attachment, along with the necessary original, certified or notarized documents (as above). Your package is sent to the Austin, Texas mailing address at:
Casino Winning Tax Canada 2020
Internal Revenue Service
Austin Service Center
ITIN Operation, P.O. Box 149342
Austin, TX 78714-9342
In general you can expect it to take at least three-four months to process your return and refund. It is acceptable to file 1040NR returns and claim refunds for the previous three years. We provide Form W-7 and 1040NR preparation services for $300, plus 12% HST and shipping.
Related Websites
Casino Winning Tax Canada Refund
IRS Tax Topic 419
Gambling Income and Expenses