We have received a number of questions from Canadian players about playing in the U.S., particularly what happens when they get a jackpot on slots out of their home country. Here’s a couple of examples:
How do Canadian players get the taxes back? Are we automatically entitled to receive the taxes back?
Beverly
And
Coming from Canada, isn’t there a treaty between our two countries that means we don’t get taxed on a win? Used to be that way. Is it still like that? I never had a good win on any of our trips to Vegas.
Judi K.
And
I am Canadian. If I win a jackpot at a US casino, do I pay taxes and if so, how?
Dominic G.
For non-US residents, there are baseline tax laws in effect for those who win a jackpot visiting here. There are then treaties that can override those defaults. This means sometimes wildly different outcomes for people from different countries, so we’re focusing our efforts on answering the Canada questions here – please note that if you’re not from Canada, this may look different from country to country.
Also our normal disclaimer applies; We’re not accountants. So we always recommend consulting with one familiar with the appropriate laws. And yes, there are lots of Canadian accounting firms that deal with, and assist players with, these issues regularly!
Our answer is put together as a combination of some of our conversations with Canadian players and the process they follow, and our looking at public postings of Canadian accounting firms that assist players with such scenarios – these procedures and rules can change over time, so getting direct accountant advice is also important for that reason.
Canadian players do owe taxes, but can have their taxes reduced with gambling losses, just like US players.
At the time of the handpay, casinos will deduct taxes from the win as the US sees gambling winnings as a form of income. Casinos will therefore withhold 30 percent of the win for taxes. Like any other player, the casino will provide a W2G which, along with the amount of the win, confirms the amount of taxes withheld at the time of the jackpot.
After the end of the tax year, a player then would file with the IRS, just like a US taxpayer would, and at that point has the opportunity to offset winnings with losses from electronic machine play (slots, video poker, etc.) from US casinos within that same year only, up to the full amount of the winnings. Players have a limited window of time to file for those refunds – at the time of writing it’s three years from the end of that tax year.
To be able to file with the IRS, a player also needs to establish what’s known as an Individual Tax ID Number, or ITIN, the first time you will be filing. This can be a more tricky part of the process, although there are occasions when casinos have assisted players with that process. Once you have one it gets a bit easier, as you’re already established. When you get a jackpot, you can provide the slot attendant your ITIN as part of the paperwork.
There are firms out there that can establish an ITIN and file on your behalf for a fee, just like tax preparers will do with normal income tax filings back at home. So for those who don’t wish to attempt to navigate this process, you can hand it off to an entity familiar with filing with the US government.
It’s important to note that the IRS states the same rules for offsetting losses here as they do for US filers. What does that mean? Win/loss statements are generally not considered sufficient. Other records, like ATM receipts, gambling logs, etc., are considered much more robust to prove your losses, specifically in the event of an audit. Also, all gambling winnings and losses are reported, not just the jackpots, from all sources, both physical and online.
Ultimately, taxes are owed upfront, but if your US gambling trip(s) in a given year led to losses overall, there is the possibility of seeing those taxes refunded.
Have a question? Submit yours here!
What about the other way around. If you’re American. Come to Canada for a visit hit a jackpot, we do t pay taxes here but will you have to pay when you return.
Thanks for your question! We answered your question here:
https://fliptheswitch.com/do-u-s-players-have-to-pay-taxes-on-canadian-wins/