Gambling U.S. Tax Refund for Canadians

Lost Money When Gambling in the United States? How Canadian Residents Can Get a Refund of 30% Withholding Tax?

When people win money while visiting a casino, excitement tends to be the main feeling they have. That is, until they realize, 30 percent of their winnings goes to Uncle Sam – the annoying 30 percent withholding tax that’s applied to even Canadian residents. On top of that, people may have to contend with state income taxes in states that impose a personal income tax. If you ever faced the 30 percent withholding and don’t know what to do, …

You’re in luck! We can help you get it back!

If you’re a resident of Canada, you don’t have to report any of those gambling winnings in Canada. You are also not eligible to claim a foreign tax credit on your tax return in Canada because you did not report any income outside the country. The only time you need to report income earned from gambling is if you’re running a gambling business.

If you’re a Canadian resident and had 30 percent withheld from your gambling earnings in the United States, you can get most or all of it back! But only if you are pro-active and take action.

So, what action should you take?

First, you need to file a U.S. tax return.  The applicable form is Form 1040NR, U.S. Nonresident Alien Income Tax Return.  In addition, you may also be required to file a state income tax return (that depends on whether the relevant state imposes personal income tax on the respective item of income).

Before filing a U.S. tax return, you need to ensure that you have an individual taxpayer identification number (“ITIN”).  If you don’t, you need to fill out Form W-7, Application for IRS Individual Taxpayer Identification Number and file it with the Internal Revenue Service (“IRS”) along with your U.S. tax return. (Learn more about ITIN Services)

Second, it’s extremely important that you have documentary proof of gambling losses – generally, in the form of bank withdrawal slips or receipts. (Learn More)

Be sure to record both your winning and losses and report them on the applicable Schedule to Form 1040NR.  Remember, this does not apply if you are running a gambling business or a part of one.