What Happens in Vegas doesn’t have to stay in Vegas!
Are you a Canadian who won in Vegas but the US Casino held back 30% percent of your winnings as tax? Have you asked yourself “how do I go about getting back my refund on those taxes?”
Casinos and other gambling establishments in the US typically withhold 30% of Canadian visitor winnings as per IRS requirements with some exceptions.
In order to qualify for a Casino tax refund, the following criteria needs to be met:
- You won in the last three years,
- Were a resident of Canada at the time of the winnings,
- You were issued a 1042-S form (typically looks like a receipt from a store or restaurant) as well as a Casino Tax Win Slip from the Casino where you won,
- Have the necessary identification documents for your Casino Tax Refund.
Canada formed a treaty with the US during 1996 wherein gambling losses can be offset against gambling winnings to either eliminate or at least reduce taxes on Casino winnings. If you want to recover the taxes withheld, you will need to substantiate your gambling losses with proper documentation as proof and produce valid receipts.
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 and 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. If you have winnings from blackjack, baccarat, craps, roulette, or big-6-wheel, there should not have been any tax withheld and you cannot use these when calculating your winnings or losses. If the Casino did withhold tax, then all of the tax is refundable.
Note: These records do not have to be submitted with the tax return, but must be available if requested by the IRS.
In order to claim your recovery, you must apply to the IRS for an Individual Taxpayer Identification Number (ITIN) as well as submit a tax return (1040NR). In order to obtain your ITIN you will need to complete form W-7 which requires you to provide certified or notarized copies of your passport or a combination of two or more other pieces of identification. These copies must be certified by the “issuing agency or official custodian of the original record”, “or notarized by a US notary public legally authorized within his or her local jurisdiction to certify that the document is a true copy of the original.” U.S. notaries public are available at US embassies and consulates in Canada. You can pay a Canadian authorized IRS “Certifying Acceptance Agent” to apply for the ITIN on your behalf. A list of the Certifying Acceptance agents located in Ontario can be found on the IRS website.
The ITIN application can be submitted with your US tax return. The tax return must include all winnings less losses and taxes paid in order to calculate whether or not you will be getting a refund. There is a rare possibility that if your wins exceed your losses, additional taxes may need to be paid.
Once you have completed the ITIN (W-7) application and your US tax return (1040NR) and submit them, be prepared that it could take up to six months to process your return and refund.
So don’t be frustrated by the amount of paperwork. Once you have it pulled together, it is pretty straight forward. Or if you need assistance please do not hesitate to contact me.
IRS – Effective June 22, 2012 the IRS made interim changes that affect the Individual Taxpayer Identification Number (ITIN) application process. You must now be an accredited agent for the IRS in order to obtain an ITIN. This requires taking a course and writing an exam.
Have you found yourself in this situation? I’d love your feedback. And here on my blog, you’ll get commentluv so don’t forget to leave a link back to your own blog too!
Until next time,