What happens when non-Americans win big in Las Vegas casinos?

Published on March 01, 2024
by Jeff Patterson

Jeff Patterson is an American living in Scotland and joined the team at Expat Tax Online after experiencing the complexities of living abroad with a family.

How do non-US citizens reclaim taxes on Las Vegas casino winnings?

When luck strikes in Las Vegas for non-Americans, a significant win can come with an unexpected partner: a 30% tax deduction by the IRS. This might feel like a dampener on your victory, but there’s a silver lining – you might be able to claim this amount back.

Why are non-American casino winners taxed?

The US tax system ensures that earnings within its borders, including gambling winnings, are taxed, irrespective of the winner’s nationality. This 30% withholding is part of a broader approach to tax non-resident income, aiming to maintain equitable treatment and adherence to US tax obligations.

Is it possible for non-US citizens to recover withheld casino taxes?

Absolutely. Non-US citizens have a pathway to reclaim these taxes. The process involves obtaining an Individual Taxpayer Identification Number (ITIN) by submitting Form W-7 to the IRS.

With an ITIN in hand, winners can file a US tax return using Form 1040-NR, potentially recovering some or all of the withheld taxes. This process is influenced by the tax treaty between the winner’s home country and the US, which might offer favorable conditions for a refund.

How can non-Americans claim a refund on casino winnings?

  • Receive Form 1042-S: After winning, you’ll get this form from the casino, detailing your winnings and the tax withheld.
  • Apply for an ITIN: Necessary for filing a US tax return, you’ll need to fill out Form W-7.
  • File a US Tax Return: With your ITIN, submit Form 1040-NR to claim your refund.
  • Consult a Tax Professional: Tax professionals specialized in non-resident issues can offer invaluable assistance, ensuring you correctly apply for your ITIN and maximize your refund potential based on existing tax treaties.

What's an ITIN, and why do I need it for tax refund claims?

An Individual Taxpayer Identification Number (ITIN) acts as a tax ID for those who aren’t eligible for a Social Security Number (SSN) but need to manage tax affairs in the US It’s crucial for non-US citizens looking to file tax returns or claim refunds on US soil, especially when it comes to getting back taxes withheld on casino winnings or other US-sourced income.

What are the steps to acquiring an ITIN?

  1. Filling Out Form W-7: Your journey to an ITIN starts with the IRS Form W-7. This form gathers your details and clarifies why you need an ITIN.
  2. Verification by a CAA: A Certified Acceptance Agent (CAA) will need to verify your identity documents, like your passport, ensuring you don’t have to send original documents to the IRS.
  3. Attaching Your Tax Return: Usually, you’ll send Form W-7 along with your federal tax return, as the ITIN application often accompanies a tax filing.
  4. Providing Identification: Along with Form W-7, include certified copies of ID documents to prove your identity and foreign status.
  5. Mailing Your Application: Once everything’s in order, mail your W-7 and tax return to the IRS.
  6. Awaiting ITIN Issuance: Processing can take six to ten weeks, after which the IRS will issue your ITIN.

How do tax professionals facilitate tax recovery?

Tax experts, especially those familiar with the intricacies of US tax law for non-residents, are invaluable in the tax recovery process. Here’s how they can help:

  • Form Preparation and Filing: They’ll ensure that forms like the Non-Resident Alien (NRA) tax return and the ITIN application (Form W-7) are filled out correctly and filed on time.
  • Passport Verification: Utilizing a Certified Acceptance Agent, they can verify your passport or other ID documents, streamlining the ITIN application process.
  • Maximizing Your Refund: Their expertise can help you understand the US tax system, ensuring you claim the maximum refund possible.

Who's eligible to request a casino tax refund?

Not everyone can claim back the casino tax, but if you meet the following criteria, you might be in luck:

  • Non-US Residents: If you’re not a US citizen or a resident alien, you’re eligible to start the reclaim process.
  • Valid ID Required: You’ll need a government-issued identification from your home country to proceed.
  • Documentation of Winnings: Keep the Form 1042-S from the casino, as it shows your winnings and the tax deducted.
  • Tax Treaty Advantages: Some countries have agreements with the US that might reduce or eliminate the withholding tax.

Ready to claim your tax refund?

  • Check Your Eligibility: First, ensure you’re eligible for a refund. This generally applies to non-US citizens taxed on gambling winnings in the US
  • Gather Your Documents: You’ll need your ID and the Form 1042-S from the casino showing your winnings and the tax withheld.
  • Apply for an ITIN: You’ll need an Individual Taxpayer Identification Number (ITIN) for the process. Fill out Form W-7 to apply.
  • File a US Tax Return: With your ITIN, submit Form 1040-NR to the IRS to claim your refund.
  • Seek Expert Advice: A tax professional with expertise in US tax law for non-residents can be a great ally, ensuring your claim is accurately filed and maximizing your chances of a successful refund.

 

The information provided herein is for general informational purposes only and should not be considered professional advice. While we aim to provide helpful and accurate information, we make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained here or linked to from this material.

Always get professional advice from a US international tax specialist.