But not so fast. Before you take off into the desert sunset to enjoy your financial windfall you’re going to have to pay up.
While it is definitely rain on your celebratory parade, it turns out any winnings in Sin City have to be shared with the tax man — yes, even if you’re Canadian. So before you dash out the door, the casino will claim a share of your haul on the spot. What happens next?
“The first they’ll ask to see your ID. And once you show them that you’re a Canadian, that is when they will tax you 30%,” says Brooke Sacks, vice president of marketing and business development at Refund Management Services (RMS).
“They’ll issue you a 1042S form and that shows your gross win and what’s been deducted.”
That 30% is pretty much standard across the United States, and it kicks in once you hit the $1,199 threshold.
Obviously, the more you win, the more painful the handover becomes. If you win $1200, the house will keep $360. If you win $500,000, you’ll be out $150,000.
“Most people are usually pretty upset about it. There’s this whole round of excitement when you win, then boom, you’re hit with this big blow,” Sacks says. “It just sucks.”
The good news? As a Canadian, you’re entitled to get it back. How do you claim U.S. casino winnings in Canada? That’s where RMS comes in. For more than 20 years, Sacks and her colleagues have helped put winnings back in people’s pockets.
“Once someone contacts us, the first thing we do for them is get them an individual tax identification number (ITIN), which is a tax processing number issued by the Internal Revenue Service (IRS) in the United States,” she says.
“The reason we get that for them is that the next step is that we have to file a U.S. return. But a Canadian needs to have an ITIN, which is the equivalent of a social security number to be able to file a U.S. return.”
Getting that number takes six to eight weeks, and the entire process typically takes three to six months from the time the return is filed. That said, there are no guarantees.
“It really depends on the processing time of the IRS, not us,” Sacks says. “And that does fluctuate. It changes from one year to the next. Sometimes it’s three months, sometimes it’s six or more. There is no set time for them. They pretty much do whatever they want — and we’re at their mercy.”
On the upside, other than signing on the line of the return, the only thing a client of RMS has to do is wait for their cheque to arrive in the mail.
“We do everything. We send you a set of documents and you literally just have to sign them. There is nothing to fill out. We take care of every little bit of information once you’ve signed on and given us permission to represent you.”
Whether you have winnings from a single trip to the U.S. or 20 over the course of 12 months, you can only file for a return once a year — and you must wait until the following year. The IRS wants all wins for a year filed and submitted together. The agency also changes its forms annually and releases new ones in January.
However, rather than sitting on their documents, Sacks always encourages clients to submit them to RMS sooner rather than later. She offers incentives for doing so.
“People will often forget about it and won’t claim it. Sometimes they will lose their slips from the casino,” she says.
“If you have them with you, get everything to me now. That includes the 1042-s. We do the prep work in advance so that everything is ready to go as soon as the IRS forms are released. We also work on a first-come, first-served basis, so if you took the time to send me your stuff early, then I’m going to make sure your documents go in really early.”
What if you’ve lost your slips from the casino detailing your win and the taxes you’ve paid? Worry not. Sacks says they have a good relationship with many Vegas casinos and can often retrieve them on a client’s behalf.
Another incentive to submit documents early to avoid forgetting about them? You can only make a claim for taxes taken in the last three years.
Little surprise it’s the large wins that are likely to be reviewed much more closely and challenged by the IRS.
“It makes sense that they’d want to make sure it’s legit,” Sacks says. “The IRS will check with the casinos to make sure they are.”
That sometimes means a client will have to show losses. As the majority of RMS clients win on the slots, the easiest way to do that is by using a players’ card.
“That way the casino knows exactly how much you’ve won and how much you’ve lost. You can ask for a win-loss statement at the end of the year. Sometimes you don’t even have to ask if you have an account, you can go online and print it.”
That said, she says if you haven’t used one, all is not lost.
In the end, is it necessary to hire an agency to help you get your money back? Or is this something you can do yourself? Sacks says people call all the time and ask this question.
“I’m very honest, I will say absolutely you can. The problem is that when you fill out the forms, you only have to make one little mistake and they will reject your claim.”
That will result in months of delay in getting a return.
“The IRS doesn’t make it easy — it does everything to deter people from trying to claim the funds. It’s like dealing with the Canada Revenue Agency. You’re dealing with people who are looking for reasons to not have to refund your money,” she says.
“And the bottom line is that if you don’t claim it within three years, they get to keep it, which is a shame because it’s money that you’ve won and you’re entitled to it as a Canadian resident.”
Sacks says by having RMS do the heavy lifting, clients will have a quicker turnaround than they would on their own and benefit from the service’s higher success rate.
“We have not been rejected on a claim in over 20 years. We’ve been challenged, but we’ve pulled through. It hasn’t happened often, but it has happened,” she says.
“We’ve been doing it for such a long time, we’re very careful about crossing our T’s and dotting our I’s. We put ourselves out there as a professional firm, so we really try hard to make sure everything is done properly so that nothing can be in question.”
For more information about casino tax recovery for Canadian’s and RMS, Click Here