USA Tax on Gambling Winnings

[Ticket]

I'm just back from a holiday in America. I was lucky enough to win $15,000 on a slot machine, but they stopped $4,200 in tax from the winnings. Is there any way that I can get all, or some, of this tax refunded, and will I need a USA accountant to deal with it for me or can a UK accountant deal with it. I managed to lose about $1000 after my win, and will probably have another holiday later this year to go horseracing in the USA - can any of this be used to help get a refund? Thanks.

[TaxationWeb@BritishA]

Gambling winnings are not effectively connected income, so they're taxed at a 30% rate with no deductions. However the US/UK tax treaty provides this possibility for you:

Article 22 - Other Income
(1) Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
(2) The provisions of paragraph (1) shall not apply if the person deriving the income, being a
resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively
connected with such permanent establishment or fixed base.

So, 100% of the tax could potentially be reclaimed. You would need to see a US tax expert versed in filing treaty claims.

[Ticket]

They only stopped 28%, but I'm afraid the rest of your answer is way above my head. But I'll take your advice in your final sentence. Thanks for taking the trouble to reply.

[davidgh1]

Hi

Well done on your win,I was in a similar situation at the beginning of the year.I won in Vegas and paid a total of $3312 in tax and decided to look at getting it back.You are entitled to all of your tax back,but you will have to file your tax return for this year from January 2006.I won in Dec 2004 and Jan 2005 and only the tax for 2004 can be claimed this year.

I am not advertising anything as I am just an ordinary bloke but you can find more info and links here www.casinofocus.co.uk commentfocus1

If the moderators remove that link here is the info from the site.I dont know if the links will work.You will get your tax back.

You've gone to Vegas and won,now you are one of the lucky few.You've hit a win of over $1200 on the slots or video poker,your machine freezes and you wait for an attendant.They insert their marker in the machine and take your details including official ID.Off they go and come back with their boss and a wad of cash.You're excited,you can't wait to get your hands on those dollars.







But what you're about to receive is not what you expected,oh no.The casino deducts 30% tax from the winnings.If you had won that amount on the table games you wouldn't be taxed,but the machines are different.But why ? I don't know.I've searched through the IRS website to find a reason but there isn't one.But what I did find was some interesting information that says that there are existing tax treaties between the US and Uk that says that tax for UK citizens is not payable if you have a "TIN".This is the information on the www.irs.gov/businesses/small/internatio ... =106252,00 IRS website Claimants must give you a Form W-8BEN (with a valid U.S. Taxpayer Identification Number (TIN)) to claim treaty benefits on gambling income that is not effectively connected with a U.S. trade or business Well who goes to Vegas pre armed with a "TIN" not many holiday makers that I know that's for sure.







So they deduct the tax then ?







Well, casinos will,it's the law,but with this extra bit of information I am going to give you,you will not have to pay the tax if you are from any of these countries,as stated on the IRS website.







Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom







Oh,that's simple I will just show my passport and I won't get taxed then ?







That should be the case,but the casino will still deduct the tax.







But why,I'm from the Uk,theres a tax treaty between our wonderful countries that exempts me,the IRS website says so,and the IRS don't make mistakes do they ?







In general I don't think they make mistakes regarding this,it's the casino that maybe doesn't know.But here's the clincher.Some casinos can issue you with an ITIN individual taxpayer identification number if they are an acceptance agent.An acceptance agent is a person who, under a written agreement with the IRS, is authorized to assist alien individuals get ITINs.The casino can apply for this on your behalf and you collect all the winnings.







I don't believe you,I hear you saying.Well take a look at this page on the















www.irs.gov/businesses/small/internatio ... =105156,00. IRS website scroll down and you will find two examples of the above.







This is a long winded way to go about things but it is easier than doing it when you get home and may think that it's not worth the hassle.Not all casinos can offer this service,or even know this exists,but I am working on this to find out more.







Alternatively,why are gambling winnings taxed in the US in the first place,for anyone from anywhere ? Even its' own citizens.In the UK all gambling winnings are tax free.If you win £20million on the lottery you get all the money in one go,right away tax free.







Come on the IRS and the US Government sort this out,if only to save all the paper work needed for your own residents when they file their tax returns.































I asked the IRS if gambling winnings in America won by UK citizens were exempt from US taxes and this is the official reply.























Under the treaty with the United Kingdom, gambling winnings are exempt. More information concerning U.S. Tax treaties can be found in Pub. 901 (U.S. Tax Treaties). The actually treaties can be found on our www.irs.gov."Internal Revenue Service website More information concerning nonresident aliens can be found in Pub. 519 (U.S. Tax Guide for Aliens).

[Ticket]

Thats brilliant. Thanks. My original plan was to wait until I go out again, take all the paperwork, and see an american accountant while I'm out there. I've read your notes, looked at the IRS website, and have now written a letter to the IRS asking for a tax number (and a tax return to complete next January).
P.S. Congratulations on YOUR win.

[Kazrae1964]

Please can anyone help me ? I to win in Las Vegas and was d ducted tax. I applied for a ITIN number and was rejected because I hadn’t filled in section h. I now know to put in exception 2D gambling winnings and United Kingdom but do not know the treaty artical number I have tried every site to find this. Can anyone help please?

[DavidTreitel]

As the first IRS Certified Acceptance Agent in the UK back in the year 2000, we have helped thousands of people applying for ITINs and have a 100% success rate in obtaining ITINs for our clients. We would be happy to assist with your ITIN application.

david.treitel@americantaxreturns.co.uk