The topic of taxes goes beyond U.S. residents. Some of Brian Christopher’s viewers from outside the U.S. periodically ask us about them too, and today’s post is a great example:
Can I ask, how come you have to pay taxes on the slot machines? I don’t think we do in Australia.
Brett C.
In the case of the United States, it’s our laws that set the tax scenario, not unlike how taxes can differ here vs. Europe around things like sales tax and so on.
In this case, the U.S. considers any income, including gambling income, to be taxable. There are scenarios where losses can offset wins, but that ultimately creates the scenarios that lead to reported jackpots, for instance – that’s codified in the tax rules that casinos follow.
What’s even more interesting is when Brian cruised out of Australia, he still had jackpots reported. And even if in a market where theoretically the tax rules are different, such as a physical casino in Australia and Canada, as a U.S. resident, tax laws still apply, because income earned outside the U.S. is still considered income.
Generally there’s a few things that come into account around these topics. Your country and/or region of residency matters (as that determines as a resident what rules apply), as well as where you’re playing.
We often get questions about whether if residents of non-U.S. countries will have taxes deducted if they get a jackpot in the U.S., and it certainly happens. Some countries have agreements in the U.S. that, if players meet the right circumstances, can avoid this happening, while others see taxes deducted by default.
All of this said, we’re not accountants, and the best way to know how to navigate all this is to talk to someone familiar with these rules before gambling in a market, so you know what to expect, and if there’s anything you should do in advance in case you do win something special.
This includes U.S. players playing outside their own state, for instance, as state tax laws can come into play as well, not just the state you live, but the state you’re gambling in at the time.
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