Gambling

If you were flying high from a big win at a Casino in the United States, you may have been brought back down to earth by the U.S. non-resident’s tax that is withholding 30% of your winnings.

The good news is that through the assistance of Bateman, Graham & Fitzpatrick, Chartered Accountants, a sizeable percentage of these winnings may be recovered if you file a tax return asking the IRS to take your gambling losses into account.

Background:

A 30% withholding tax is automatically deducted from gaming jackpots larger than $1,200 before being paid out to the winner. This tax is mandatory and is regulated by the IRS. However, in many cases, this tax can be recovered if you choose to file a U.S. tax return.

Requirements for Eligibility:

  • You must be a non-US resident
  • You must have certified documentation to prove your identity (such as a passport, driver’s license or birth certificate)
  • Your gaming winnings must have occurred within the last three years
  • You have an IRS Form 1042-S, issued by the casino following your win
  • You have records that document your winnings and losses

Process:

Gather all pertinent information

Following your win, the casino will have issued you an IRS Form 1042-S detailing the tax that was withheld. If you no longer have this form, it may be possible to contact the casino for another copy.

You will need to provide as much proof as possible of your gaming activities within the year of your win. For this reason, it is important to keep accurate records of both wins and losses. If you are attempting to deduct your losses, you will need to produce receipts, statements or other records to indicate these amounts if requested by the IRS.

If you have a members or players card from the casino, you may be able to obtain a detailed record of your gaming activity from the casino.

Documentation

Valid and current documentation is needed to apply for a U.S. Individual Taxpayer Identification Number (ITIN), which gets submitted with the tax return filing.

Filing an ITIN application requires certified documentation, preferably a valid passport. If a passport is not available, the IRS will also accept from a variety of other official documentation. Contact our office for a detailed list of other acceptable documents.

We have an IRS Certified Acceptance Agent on staff that can provide assistance with your ITIN application. You would not have to get your official document(s) notarized by the issuing agency if you use this service.

Filling out Forms

You will need to fill out one or two forms.

  • W-7 (if you’ve never filed a US tax return before)
  • 1040NR Tax Return

If your winnings are from multiple calendar years, you will need to file a tax return for each year.

Recovering your winnings:

The process of recovering your winnings will take a minimum of 4-6 months, depending on the time of year when the application is submitted.

During this time period, the IRS will review the documentation. If the IRS decides to conduct an audit, it will be necessary to have detailed and accurate records, including receipts, of your gaming activities.

The staff at Bateman, Graham & Fitzpatrick are ready to offer assistance through this process to help you recover your winnings as soon as possible.