How to Claim U.S. Casino Winnings in Canada?
The lights are flashing and the bells are ringing. This is what you hope for every time you pull the slot machine’s arm. It’s the big win and it’s why you’ve come to Las Vegas.
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 over and above $1199.00 in Sin City have to be shared with the tax man — yes, even if you’re Canadian. So before you dash out the door, be aware the Internal Revenue Service (IRS) will claim a share of your haul on the spot.
“The first thing they’ll ask to see is 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 your win reaches the $1,199 threshold.
Obviously, the more you win, the more you pay.
If you win $1200, the IRS will take $360. If you win $500,000, you’ll be out $150,000.
“Most people are usually pretty upset about it. There’s so much excitement when you win, then boom, you’re hit with this big blow,” Sacks says. “It takes away from the big winning moment.”
The good news? As a Canadian, you may qualify to get it back. And that’s where RMS comes in. For more than 20 years, Sacks and her colleagues have operated RMS, Canada’s top choice for gaming and casino tax refunds, helping put winnings back in Canadians’ pockets, where they belong.
“When someone contacts us, we immediately collect their contact information and process it quickly so we can apply for an individual taxpayer identification number (ITIN) on their behalf at the appropriate time. An ITIN is a tax processing number issued by the IRS for Canadians filing a return in the U.S.,” she says.
“An ITIN is required in order for a Canadian to file a US return. An ITIN is the equivalent of a social security number which most Canadians don’t have.”
The ITIN is issued within six to eight weeks, and the entire process typically takes three to six months from the time the return is filed until the refund is received. That said, “it really depends on the processing time of the IRS,” 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. We make sure to follow up regularly so we know what to expect and can communicate that to our clients.”
Other than signing the documents sent to them, the only thing a client of RMS has to do is wait for their cheque to arrive in the mail.
“There is nothing to fill out as we do all of that for our clients. We take care of every little bit of information once you’ve signed on and given us permission to represent you. We take care of everything. We send you a set of documents and you literally just sign where indicated, unless you have questions of course.”
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 — at the beginning of the year following the win(s). The IRS wants all wins for a year filed and submitted together. The IRS also changes its forms annually and releases new ones in January. Having said that, if you have winnings from a previous year with taxes deducted that have yet to be claimed, we can file for those right away and clients should send those in ASAP before they expire.
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 sometimes they will lose their slips from the casino,” she says. So it’s best to contact us with your slips in hand as soon after your win as possible. We do the prep work in advance so that as soon as the IRS forms are released we can promptly complete your filing. Our goal is always to get the refund for our clients as quickly as possible. We also work on a first-come, first-served basis, so if you take the time to send us your slips early, we’re going to expedite the submissions of your documents to the IRS.”
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 as well as others in the U.S. 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 so best to take care of this right away before your time is up.
Little surprise, it’s the large wins that are likely to be reviewed much more closely and sometimes challenged by the IRS.
“While the IRS reviews all claims, it makes sense that they’d want to make sure these claims in particular are properly supported,” Sacks says. “The IRS will check with the casinos to make sure they are.”
That sometimes means a client will have to submit proof of losses. As the majority of RMS clients win on the slots, the easiest way to prepare for 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 then ask the casino(s) in question to provide you with a win-loss statement at the end of the year. Alternatively, if you have an online account, you can go online and print it yourself.”
That said, she says, if you haven’t used one, all is not lost. There are other ways and RMS is always happy to discuss all options available with their clients.
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 must be diligent as even one little mistake will risk having your claim rejected.”
That will result in months of delay in getting a return.
“The IRS does not make this process easy – there are many criteria that might deter people from trying to claim the funds.” she says.
“And the bottom line is that if you don’t claim it within three years, your opportunity is lost and the money stays with the IRS – this is a shame as it’s money that you’ve won, and you’re entitled to 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 high success rate.
“We’ve been doing this for such a long time, we’re very careful about crossing our T’s and dotting our I’s. We are a professional firm that takes pride in everything being done properly so that nothing can be in question.”
Overall, RMS is clearly the best choice for tax recovery for Canadians and other non-US residents who’ve had 30% deducted from their wins. They are committed, professional and have an excellent reputation after over 20 years in the business perfecting and making the process as easy as possible for all of their clients.
For more information about casino tax recovery for Canadian’s and RMS, Click Here