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U.S. Taxes on Gambling Winnings: Lottery, Casino, Etc.

Congratulations on your U.S. gambling winnings!

You may have been surprised though, that the casino or gaming facility withheld 30% of your winnings. You received a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, stating the amount of tax withheld.

However, not all winnings need to be reported on Form 1042-S. According to the IRS, “Proceeds from a wager placed in blackjack, baccarat, craps, roulette, or big-6 wheel are not amounts subject to reporting.” Winnings from a lottery, bingo, or slot machine are some that are subject to reporting.

Since gambling and lottery winnings are not taxable in Canada, you may be entitled to a refund of the amounts withheld.

Gambling Losses

The Canada-U.S. Tax Treaty allows Canadians to deduct their gambling losses from their winnings, providing you can provide proof of your losses. There are several ways you can do this:

  • Keep a detailed log of all the dates you played at casinos, the names of the casinos, and the amounts won or lost.
  • If you played the slots or any other gaming machines, record the machine numbers.
  • Obtain win/loss statements from the casinos; some larger casinos have online accounts for customers to access their win/loss statements.
  • Keep any other proof of your losses, such as cancelled cheques, credit card receipts, etc.

Getting Your Gambling Tax Refund

Naturally, you want your withholding tax refund and we can help you get it in the most efficient manner:

1 ITIN (Individual Taxpayer Identification Number)

If you already have an ITIN, you’re part way there. If you don’t have one, you will need to obtain it in order to file your U.S. tax return.

You can do so:

  • By mail or private delivery service, or
  • In person at an IRS Taxpayer Assistance Center.

You should be aware that applications are sometimes rejected by the IRS for incomplete or inaccurate submissions, or invalid documents. This can cause long delays that could lead to filing your tax returns late and incurring late filing penalties and interest.

We can make it much easier for you. As an IRS Certifying Acceptance Agent, we can streamline the ITIN application for you.

We are authorized by the IRS to authenticate your documents and your identity in person or virtually and submit them directly to the IRS.


2 Filing Your Non-Resident U.S. Tax Return

At this point you are ready to file the following tax returns:

  • Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
  • Personal tax return for your U.S state, if applicable. Some states do not have state income tax.

Simply provide us with your Form 1042-S, or several if you’ve been on a roll! Also, we will need the details of any other U.S. income and deductions, if any, for the year. We will also require your win/loss details in order to file your tax return.  If your withholding tax is higher than the tax on your net winnings, the difference will be refunded.

Our managing partner, Asif, and our lead, Jeanine, are Enrolled Agents, admitted to practice before the IRS.

Canadian Tax Return

Since gambling and lottery winnings are not taxable in Canada, you don’t have to include your winnings on your Canadian personal tax return.

Get Started on Your Gambling Tax Refund Today

Our services can be provided in person or virtually through our two offices, located in Calgary and Toronto. Contact us to start the process!