Obtaining an ITIN for Gambling Winnings
Gambling winnings are considered to be taxable income in the United States, even if you are not a US citizen. All gambling winnings are supposed to be reported to the IRS, regardless of receipt of IRS forms issued by the payer.
Gambling institutions are required to issue form W2-G (or in some cases form 1042-S or 1099-MISC) when the amount of your winnings exceed certain thresholds. The gambling institution will issue a W2-G for the following winnings:
$600+ at a horse track (if the winnings are more than 300 times your bet)
$1200+ in a single jackpot at a slot machine or bingo game
$1500+ in a single Keno win
$5000+ in poker tournament winnings
Certain other gambling winnings not listed above
Gambling winnings include cash and non-cash prizes.
Tax Treaty
Many countries have tax treaties with the U.S. which reduce or eliminate any tax on gambling winnings. However, even though you aren’t taxed on your winnings, you may still need to report them to your local tax authority.
How do I avoid a tax withholding in the first place?
Completing a Form W-8BEN and presenting this to the gambling institution will allow your withholding to be reduced or eliminated. However you need to have an ITIN first for this to happen.
To obtain an ITIN without having to file a tax return - you must use the services of an appropriate gaming official serving as an IRS ITIN Acceptance Agent to apply for an ITIN under Exception 2(d).
N.B. If you don’t secure the services of a gaming official, you may still file Form 1040NR at the end of the tax year with a Form W-7, attaching a copy of Form W2-G or 1042-S displaying the amount of tax withheld. Your Form 1040NR return also should display the tax treaty article number and country under which you’re claiming the treaty benefits.
How can I claim back the tax withheld on my gambling winnings?
Generally, casinos and other gambling institutions are required to withhold 30% tax on the gross proceeds from gambling won in the United States, if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty. This also applies when not presented with a valid ITIN for the W2-G form. You can claim back the tax by Obtaining an ITIN for Gambling Winnings and by filing a 1040NR.
No tax is imposed on non-business gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette or big-6 wheel in the United States.
Non-resident aliens are taxed at graduated rates on net gambling income won in the United States that is effectively connected with a U.S. trade or business.
Certain nationals (non-residents of the United States) can recover the withheld taxes by filing a US tax return (Form 1040NR) and use the US Tax treaty with their country to allow for non-taxation of the income. This should recover all the taxes withheld on the winnings.
Once the tax return has been completed, you can file this with a Form W-7 Application for an ITIN. The ITIN will be issued within 9 to 11 weeks and once the tax return is processed a refund will be issued (by cheque or direct deposit to a U.S. bank account).
Can I have withheld taxes refunded to me for prior years?
If you had taxes withheld from your winnings, you may be able to get it back. Here is what to do:
Obtain a US taxpayer identification number (ITIN) using Form W-7 with the IRS (this is attached to the tax return being filed).
Gather all your tax forms given to you by the gambling institutions.
File a US tax return for non-residents, Form 1040NR (a 5 page form) for each year.
Report all gambling winnings on the tax forms along with any taxes that were withheld from them.
Attach the W2-G or 1042-S to the tax return showing the withholding.
Attach Form 8833 to declare the use of a treaty position in order make the winnings non-taxable. The IRS will refund all taxes withheld. There is a 3 year time limit on claiming a refund from the IRS.
Just Breve have assisted many clients obtain gambling winning tax refunds - call or email us to find out more.
My tax withheld was only $400 - is it worth me claiming?
Obviously, this has to be on a cost effective basis, as there is no point in paying $400 for claiming back the same amount of money, let alone the hassle of filling in the paperwork. It all comes down to choice in this case.
Useful links:
Do I need an ITIN?
Please refer to our blog post "ITIN Number Application" for further information.
A Certified Acceptance Agent (CAA) can assist you in obtaining the correct TIN.
Just Breve are part of the ITIN Acceptance Agent Program. As a Certifying Acceptance Agent (CAA), we are authorised by the Internal Revenue Service (IRS) to assist alien individuals and other foreign persons with obtaining ITINs from the IRS by validating the person’s foreign status and identity.
Just Breve are London based Certified Acceptance Agents and cover London and the surrounding areas (including London Heathrow) as well as the United Kingdom (subject to travel costs as applicable).
Contact Us:
info@justbreve.com
Don't live in the U.K? No problem, we can assist by phone, email and Skype. Please feel free to get in touch.