Canadians visiting the U.S. to gamble may find that their gambling earnings have been reduced by 30% for tax withholding at source. These US non-residents have the potential to recover gambling taxes by filing a US non-resident tax return.
The US Casinos are required by the IRS to withhold 30% on any winnings over $1,200 by Canadians and US non-resident tax payers. The casino will issue the non-resident a form 1042-S showing the gross amount of the earnings and the amount representing the 30% withholding for non-residents.
It’s possible to receive a tax refund from the IRS for the 30% withholding by filing a 1040NR non-resident tax return. You gambling losses can be used to reduce your gambling earnings subject to the 30% withholding which will usually results in an IRS tax refund. In order to claim the losses you must itemize your losses by keeping accurate records, statements, tickets and other records substantiating you gambling losses. You can read more on the IRS website here.
Please note that you have up to 3 years to file a 1040NR non-resident tax return to be eligible for a gambling tax refund.
Canadian residents that would like to file a 1040NR to recover US gambling taxes must also obtain an Individual Taxpayer Identification Number (ITIN). The ITIN is requested by completing form W-7 which needs to be validated by an authorized Acceptance Agent.
As authorized acceptance agents we can prepare and file both your 1040NR and W-7 (request for an ITIN).
Please call us today at 250-661-9417 to find out if you qualify for a US gambling tax refund.