We live in Prince George, British Columbia, and had a glorious second honeymoon in Las Vegas the last ten days of December. On Christmas day, my husband hit a jackpot. We were surprised that 30% of the amount was withheld for U.S. taxes. How do we get that money back? The slot people either didn't know or didn't want to give us advice (we couldn't tell which).
'Tis the tax season, which is why we're running two tax questions in a row. As in yesterday's answer, we turned to Tax Help for Gamblers, which has a comprehensive section called "Gambling Issues for Non-U.S. Citizens" (and is available for pre-purchase at the link; it will be back from the printer and e-book producer in a few weeks). The book quotes an excerpt from the IRS website that uses Canada as an illustration of how some non-residents can get a refund of withholding tax.
"Generally, you must file a tax return to claim a refund of withholding. Gambling winnings by nonresidents of the U.S. are taxed at a flat 30% tax rate. However, under the U.S./Canada Tax Treaty, residents of Canada may claim gambling losses, but only to the extent of gambling winnings. You should report both your total gambling winnings and your total gambling losses on page 4 of Form 1040NR, U.S. Nonresident Alien Income Tax Return, on the dotted portion of line 79. If you have net gambling winnings (after offsetting your total losses against your total winnings), you should include this net amount on line 79, column (d) of the Form 1040NR. You should also attach a copy of the Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, showing the taxes withheld, to your Form 1040NR."
Got it?
If not, in plain English, you can recover some or all of the 30% withheld for taxes, if you kept a copy of the 1042-S issued by the casino, if file a 1040NR, and if you can claim gambling losses (up to the amount of the jackpot). Tax Help for Gamblers covers all the ins and outs of proving that you also lost money gambling, which basically boil down to keeping a detailed diary of the results of your gambling sessions throughout your Vegas trip.
Another possibility is to employ a "jackpot-recovery" company, such as U.S. Tax Recovery -- Managing Your Casino Tax Refund ("It's Like Winning All Over Again"). According to Tax Help for Gamblers, these companies can help you with filing forms and obtaining the proper ID numbers.
"Fees for this service tend to be high, usually 25%-30% and sometimes as much as 50% of amounts recovered. However, this may be worth it to some people, because part of their service includes dealing with casino accounting departments and obtaining win/loss data."
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Albert Pearson
Feb-01-2019
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