Understanding the necessary steps in filing Casino tax refund is grueling
Posted by juliabennet on May 18th, 2012
Let us establish some facts here: you are a Canadian citizen, giving you the status of a non-resident or non-citizen in the US. You went there to gamble, maybe in Atlanta or in Las Vegas. You won some money, amounting to a few thousand dollars. According to law, withholding tax will be applied to your winnings from the casino. This is something new for you since lottery winnings and contest prizes are nontaxable in Canada. When you apply for tax return in Canada, the information on your casino tax in the US will not be reflected. You can only get a refund by following the necessary steps for the Casino tax refund as established by the IRS.
The idea behind the Casino tax refund
According to the law, non-residents have the privilege to get Casino tax refund. By law, 30% of the gambling winnings are taken from you. According to US law, it is possible to recover some or all of the taxes if you meet the requirements. First, you have to show that you have gambling losses to offset these winnings. The second one is that the tax was withheld from games like Blackjack, craps, baccarat, big-6 wheel and roulette. If you meet all the criteria and you know that you have considerable losses against winnings, then you can file for a Casino tax refund.
Before you get the Casino tax refund
Obviously, you need to file for the Casino tax refund from the IRS which is the agency that handles all tax related aspects as well as refunds for those who pay taxes. The US Casino tax refund form that you should get is the IRS form 1040nr. This is also known as the US non-resident alien income tax return. The gambling wins, and losses, lottery wins, and other relevant details will be recorded on the Schedule NEC which is part of the IRS form 1040nr, as long as you are not in the business or trade related to gambling. It is ideal that you read through the instructions in filling out the IRS form 1040nr and the included Schedule NEC.
Filling it out
If you are determined to get your own Casino tax refund, then you have to know how to fill out the forms. First, look at Line 10a on the Scheduled NEC. This will contain spaces where you will place the amount of proceeds that you got from raffles, lotteries. If you won in games like baccarat and the likes, then the casino must have given you a variation to the IRS form 1040nr. This is what they call 1040-S which is the foreign person’s US Source income which is subject to withholding. If you show that these winnings were already tax withheld, you enter the details on line 10d. The tax rate should be 0%. Now, you can get a Casino tax refund.
Filing for Casino tax refund is very difficult especially for someone who does not have the patience with filling out papers and other details but if you want to exercise the right to get rebates for your winnings, then you have to take the initiative. It is all worth it at the end of the day.
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