Tax on winnings outside of Canada
I'm wondering what is the rule of taxation on winnings outside of Canada.
I've seen those ads where they say you can get back 30% of your taxes that you paid or something from Vegas, but wondering what is the actual law regarding this.
I know Devin, Dave and others have had big pay days from tournaments outside of Canada. Were you taxed on that, and if so what are the % and where can I find out more info on this. I tried Revenue Canada and the Customs website but I can't find anything. Maybe its just me after the whole day of poker/studying though
I've seen those ads where they say you can get back 30% of your taxes that you paid or something from Vegas, but wondering what is the actual law regarding this.
I know Devin, Dave and others have had big pay days from tournaments outside of Canada. Were you taxed on that, and if so what are the % and where can I find out more info on this. I tried Revenue Canada and the Customs website but I can't find anything. Maybe its just me after the whole day of poker/studying though
Comments
Hobbes
Biggest check was 2500US and I have had multiple sites pay at or near that level.
I'm asking in general winnings overseas. Say you go out and win an event at the WSOP (waiting for those bracelets Team Canuck
You have to pay a withholding tax when the Casino cuts you a cheque. It took a while to get it back, but wasnt too dificult.
I think this is why all the Big Players have safety deposit boxes. It allows them to keep a working equity without paying the taxes on the swings.
(1) Poker winnings are taxable income in the U.S.
(2) If you are from a country that has no tax treaty with the U.S. (Canada) then the U.S. will withhold 30%. This is just like your employer withholding some of your income and turning it over to the government.
(3) To get it back you will have to file a U.S. tax return and reduce your taxable income sufficiently so that you do not owe any taxes. Then you will get a tax refund in the amount of the original withholding.
I have heard lots of people say "You can get it back. There is a form you fill out." To be honest, I do not believe this. I have never had anybody show me the form or explain how to do it.
Under the Canada-U.S. Income Tax Convention, you can claim your U.S. gambling losses up to the amount of your U.S. gambling winnings for the year using the same rules that apply to U.S. citizens and residents. To claim a refund of taxes withheld from gambling winnings, you must file Form 1040NR, U.S. Nonresident Alien Income Tax Return.
However, winnings from blackjack, baccarat, craps, roulette, and Big-6 wheel are exempt from tax.
http://www.cra-arc.gc.ca/E/pub/tg/p151/p151-e.html
The issue of the US-Canada tax treaty is only relevant if you are a Canadian residing in the
US and you still have residency in Canada as well.
If you reside in Canada, you can't get a tax credit for the US tax you pay because foreign
tax credits are limited to the amount of Canadian tax that would have been payable on the income
if you earned it in Canada. Since gaming income is not taxable in Canada unless you are a professional
gambler, the deduction in 0. Of course, the income inclusion is also 0 so either way you pay no tax.
The withholding that they nail you with will depend upon what country you come from. And, as I understand it, Uncle Sam says "If you tax this money we will let it go, if you don't we will tax it." So, if you are Canadian they withhold 30% and you have to file. If you are from the U.K. they do not withold but the money must be declared in the U.K.