Withholding Tax in the US nonresident alien and exemption treaty

BubbleG

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Earth, man!
hey

I'm hopefully going to Vegas in a few months time and as you do I plan to win big :)

So last time I was there I hit a 1200 coin win on the VP and got stung for 30%....

Can anyone link me to the forms or correct information I need to not pay any tax if (when) I hit that huge slots win. As I understand it as a UK citizen I am gambling tax exempt via treaty however simply being a UK citizen does not mean the casino won't withhold. If i'm understanding correctly I need a TIN? Do I need anything else as I want to be prepared this time.

If anyone can help or link me to some simplified instruction and a link to the correct forms or form I need to fill in that would be great.

Thanks
 
hey

I'm hopefully going to Vegas in a few months time and as you do I plan to win big :)

So last time I was there I hit a 1200 coin win on the VP and got stung for 30%....

Can anyone link me to the forms or correct information I need to not pay any tax if (when) I hit that huge slots win. As I understand it as a UK citizen I am gambling tax exempt via treaty however simply being a UK citizen does not mean the casino won't withhold. If i'm understanding correctly I need a TIN? Do I need anything else as I want to be prepared this time.

If anyone can help or link me to some simplified instruction and a link to the correct forms or form I need to fill in that would be great.

Thanks

When I went in 2006 I learned that I should have my passport handy. The win would be a "hand pay" being so large, but with my passport I could get an exemption form and not have the 30% deducted. Failing this, it's a matter of claiming a refund upon your return, which probably involves quite a bit of form filling.

I was unable to test this out myself as I failed to hit the Royal Flush or get a massive bonus round on the slots. I was only there for 2 full days, but the entire trip was a VIP freebie:D
 
You may want to research for W-8BEN. This is an international tax exemption form. Hopefully this would help prove you are tax exempt to not have the taxes withheld and go through the mess of requesting a refund.

I would also call a few of the US casinos and try to get to the cashier so you can find out exactly what they need.
 
I'm sure lots of people will offer you advice on what to do, but if you want to get the real answer go to the source. There is an IRS office in London.
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They can answer your questions better than anyone.

As a US citizen I have never had any casino withhold any taxes on any win ever, including some for 10K. They have always paid the entire win and given me a tax statement.
 
You may want to research for W-8BEN. This is an international tax exemption form. Hopefully this would help prove you are tax exempt to not have the taxes withheld and go through the mess of requesting a refund.

I would also call a few of the US casinos and try to get to the cashier so you can find out exactly what they need.

I have tried everything with the casino's but have always had to pay and claim it back when I returned back to Canada, I am sure they know full well they are not supposed to keep it but most people don't claim it because they are uninformed, saying that even the informed ones get the run around, I would hazard to guess not many get an exemption.
 
I'm sure lots of people will offer you advice on what to do, but if you want to get the real answer go to the source. There is an IRS office in London.
here is a link.
You do not have permission to view link Log in or register now.


They can answer your questions better than anyone.

As a US citizen I have never had any casino withhold any taxes on any win ever, including some for 10K. They have always paid the entire win and given me a tax statement.

The IRS have this form available for download in PDF format so that it can be filled in and printed off. It also has a PDF guide. The latest revision is Feb 2014. The other change made since 2006 is that a visa waiver must be obtained prior to departure from the US embassy (I filled it in on the plane just before landing). It is also no longer free. I think it can be done online rather than having to visit the Embassy in person.

It would be best to go prepared, rather than rely on getting it sorted out after you hit such a big win.

It's the draconian security procedures that puts me off flying there again, so the terrorists really have won. They are patting down small children, and randomly strip searching others (it seems), and you have no rights to object to whatever humiliating procedure they pull out of their butt on the day.

I would rather go by ship, less of the bullcrap. Even flying to Canada and getting the train over the border might be better, but it's a hell of a long way to Vegas from there.
 
As a US citizen I have never had any casino withhold any taxes on any win ever, including some for 10K. They have always paid the entire win and given me a tax statement.


It varies by location. Some withhold on anything over $1,000. Others for anything over $1,500. Others do not withhold at all. As far as I know, the casino withholding the taxes in advance is not compulsory, but is a matter of policy set by management. I may have misunderstood the position on that though.
 
As a US citizen I have never had any casino withhold any taxes on any win ever, including some for 10K. They have always paid the entire win and given me a tax statement.

Yes you are not required to have federal withheld. There are some dollar figures that may require Fed to be held, but I believe they may be large progressives. State is normally the only thing you will be required to have withheld depending on the state. Florida is one that does not take state tax I assume because there is no state tax.

It varies by location. Some withhold on anything over $1,000. Others for anything over $1,500. Others do not withhold at all. As far as I know, the casino withholding the taxes in advance is not compulsory, but is a matter of policy set by management. I may have misunderstood the position on that though.

It is federal and state guidelines. Federal Requires anything $1200 or above to be reported, the state will then work into anything $1200 and above also. If your in a state that has state tax they will take out the state. It is not an option to not have it withheld. The state taxes are of course significantly lower that the Fed. So now of course you will be required to then report the winnings on your taxes on $1200 because it has been reported. Obviously you can then get win loss statements and if losses are more than winning you can itemize and wash up to the reported winnings.
 
I go to Vegas at least 4 times a year, $1200 has always been the threshold on slots, hand pays with 30% deducted after that amount, if I am on a roll on a machine I will pull the ticket if I get close and deposit.

Here is the assumed rule:

There are some things you should know if you are lucky enough to win. The Internal Revenue Service (IRS) requires all casinos in certain instances to withhold federal taxes if you win over a certain amount. The percentage withheld ranges between 25 and 30 percent depending on how you won. Here is how it works.

If you had gambling winnings, the casino is required by the IRS Information Reporting rules to withhold 28% as income tax if you do not provide a documented TIN (Taxpayer Identification Number, that is, your Social Security Number.) We have heard of cases where it is withheld no matter what. The withholding tax is 30% if a foreign gambler. The tax rate is 25 percent if the amount is over $5,000 (except for non-resident aliens.)


When your winnings exceed a specified threshold and/or tax is withheld, the casino will give you an IRS Form W-2G showing the amount you won and the amount of tax withheld. Report (and take credit for the tax you paid) on your IRS Form 1040 tax return at the end of the year. (Only use Form 1040 if you had gambling winnings; you cannot use any other form.) IRS Form W-2G

Generally, gambling winnings are reportable to the IRS if the amount paid is (a) $600 or more and (b) at least 300 times the amount of the wager. This requirement primarily applies to lotteries, sweepstakes and other big winnings from small bets. It does not apply to winnings from bingo, keno, and slot machines.

Casinos report gambling winnings for these games to the IRS when a player wins $1,200 or more from a bingo game or slot machine or if the proceeds are $1,500 or more from a keno game. When you exceed these amounts, the casino may withhold taxes and will provide you with IRS Form W-2G. They keep the original and give you two copies of the form. (If state income tax withholding is required on gambling winnings in your state, additional taxes may be withheld.)

The rules are different for table games (such as blackjack, baccarat, craps, roulette or other spinning wheel games.) Since Nevada casinos do not know the amount you started with, they are not able to determine how much you won (...your taxable gain.) As a result, federal law provides that there is no withholding or even reporting of table game wins to the IRS. It therefore follows that table game winners probably do not report their gambling profits to the IRS.

You not only pay taxes on gambling profits, but you can also claim gambling losses as an itemized deduction as well. But you must keep some kind of documentation (such as a diary or tickets) to substantiate the amount and nature of the losses. In any event, you cannot claim gambling losses that exceed your winnings.
 
I think it can be done online rather than having to visit the Embassy in person.

The problem with this statement are the words "I think". The IRS is not well versed in that phrase, so I would save yourself a lot of trouble and call them before your trip rather than find out you have wrong or outdate information. A few minutes of your time on the phone now could same you time & money later.
 
The problem with this statement are the words "I think". The IRS is not well versed in that phrase, so I would save yourself a lot of trouble and call them before your trip rather than find out you have wrong or outdate information. A few minutes of your time on the phone now could same you time & money later.

It's a form designed to be filled out and saved on your PC, so this must be intentional. It at least helps in knowing what to ask when you phone, rather than having to phone several times because you didn't know everything you needed to ask first time. It's what to do once filled in that needs clarification if the intent is to receive the winnings without any tax being withheld.
 
I have called the IRS on numerous occasions for assistance with doing my taxes. They are actually quite helpful. I'm sure that the London office is probably asked this question quite often and should be able to provide a complete and comprehensive response to this question.
 
The problem with this statement are the words "I think". The IRS is not well versed in that phrase, so I would save yourself a lot of trouble and call them before your trip rather than find out you have wrong or outdate information. A few minutes of your time on the phone now could same you time & money later.

Agree, please also take the advice of calling the casino cashiers also. I do believe that there is a way to be exempt from the beginning. I think for W-8BEN is psrt of it, but at the same time, the IRS will be just like chat support with there vague answers. I bet there are plenty of International people that have the right to get a refund, but give up on it because of the process and difficulties.

If the IRS gave up too much information that would mean more people getting their full funds which would then mean they would have to do more budget cuts, possibly impacting Obamacare or even the Obamaphone:eek:.
 
This is copied off the IRS website, bad luck if your in Canada you have no choice but to go through the motions. As a UK citizen however that shouldn't be the case but it would seem you have to somehow invoke the tax treaty with the withholder... I have bolded the statement that says Tax treaties. Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States.......The UK is one of these countries

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Gambling winnings (Income Code 28). In general, nonresident aliens are subject to NRA withholding at 30% on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty. The tax withheld and winnings are reportable on Forms 1042 and 1042-S.
No tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. A Form W-8BEN is not required to obtain the exemption from withholding, but a Form W-8BEN may be required for purposes of Form 1099 reporting and backup withholding. Gambling income that is not subject to NRA withholding is not subject to reporting on Form 1042-S.
Nonresident aliens are taxed at graduated rates on net gambling income won in the U.S. that is effectively connected with a U.S. trade or business.
Tax treaties. Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Iceland, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russia, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.
Gambling income of residents of Malta is taxed at 10%.
Claimants must give you a Form W-8BEN (with a TIN) to claim treaty benefits on gambling income that is not effectively connected with a U.S. trade or business. See U.S. Taxpayer Identification Numbers , later, for when you can accept a Form W-8BEN without a TIN.
 
Claiming Tax Treaty Benefits

Ah here we go..... I guess then the casino just does the bear minimum paperwork and withholds, you then must state clearly your intention to fill in the section Certificate of Foreign Status of Beneficial Owner on the W8 (this is part 2 of the form Claim of Tax Treaty Benefits) for United States Tax Withholding with the withholding agent.

You would also need details of the reasons the beneficial owner meets the terms of the treaty article: ....... To complete the form

Exemption from Withholding
If a tax treaty between the United States and your country provides an exemption from, or a reduced rate of, withholding for certain items of income, you should notify the payor of the income (the withholding agent) of your foreign status to claim the benefits of the treaty. Generally, you do this by filing Form W-8BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding with the withholding agent.
 
What then would the answer to "Explain the reasons the beneficial owner meets the terms of the treaty article:" be? Because I am from a country the US has an income tax treaty with. I would be claiming a 0% rate of withholding and the type of income would be - Gambling winnings (Income Code 28)
 
It would appear if i'm understanding this correctly that you still need a TIN to claim the treaty benefits.

Would the TIN be unique, lifetime number once issued? If so I should have one in the system from my last visit then so I would need to provide that upfront aswell.
 
just out of curiosity...what if you win multiple small amounts say 800$ and cash them each time to avoid going over the 1200 limit?
 
just out of curiosity...what if you win multiple small amounts say 800$ and cash them each time to avoid going over the 1200 limit?

The 1200 taxable is based upon a 1 spin win or a bonus accumulation that goes to 1200. For example If you win 500 a spin 10 times and get the balance to 5000 you will not be taxed cashing out. If you spin once and hit 5000 you are taxed.

These are rues that are a must know if your going to gamble at a B&M. I have slot attendants try to tax me multiple times when it was a hand pay and not a jackpot. A hand pay is when you have a large amount accumulated and you push the cash out, but the machine is not programmed to print a large ticket, so it will ring like a jackpot and flash amount but say hand pay. I have had to send tax reporting s back many times because it was just me accumulating a large win over time and many spins. A jackpot locks up machine after the one spin or accumulation in bonus. Whenever cash put over 1200 and is a hand pay I clarify with he attendant that it is not a jackpot.
 
What then would the answer to "Explain the reasons the beneficial owner meets the terms of the treaty article:" be? Because I am from a country the US has an income tax treaty with. I would be claiming a 0% rate of withholding and the type of income would be - Gambling winnings (Income Code 28)
It would appear if i'm understanding this correctly that you still need a TIN to claim the treaty benefits.

Would the TIN be unique, lifetime number once issued? If so I should have one in the system from my last visit then so I would need to provide that upfront aswell.

Good questions. All best answered by a phone call to the IRS rather than to speculate and guess. They have gotten a bad reputation over the years, but my experience has been that they are very customer oriented and willing to help.
They are not some unapproachable big government organization. Give them a call and just ask your questions. It will put your mind at ease, so you can relax, enjoy your vacation and instead worry about what buffet has the best meal for tonight's dinner.
 
Obviously you can then get win loss statements and if losses are more than winning you can itemize and wash up to the reported winnings.

That is a good point. I would only add that even if the losses are not more than winnings, they can still offset some portion of the winnings so that you owe a lower amount of tax. I'm not sure how this applies to the OP's situation though. As others have said, I would call the IRS.
 
That is a good point. I would only add that even if the losses are not more than winnings, they can still offset some portion of the winnings so that you owe a lower amount of tax. I'm not sure how this applies to the OP's situation though. As others have said, I would call the IRS.

In the OP's situation it doesn't matter because OP will be tax exempt. If she can not get the casino to give the total gross win to them and they take 30%, they will then have to file for a refund and because of tax exempt status they will be able to get full refund regardless of wins or losses.
 
This is just a stupid rule, but I suppose it does yield revenue because of all the hoops it creates. The ONLY winner in the long run is the house, so just tax the house to the tune of 30% of the gross hold, and let the players, both home grown and foreign, just have their entertainment without having to get tax advice.

It's what the UK system does, and is why punters at casinos don't have to worry about their taxes when playing.

If the UK government tried to tax individuals on their gambling wins, the industry would be up in arms as many casual players would quit rather than get involved with an annual tax audit. Most UK people don't have to "file taxes" as deductions from income are automatic, and in most cases the system works. Only the self employed and freelance workers have to worry about filling in tax forms, calculating and paying what is owed, and figuring out what they can claim against their tax liability.

Even the US loses out because the burden of admin is so great that they just don't worry about wins below $1200, yet much of the play involved produces revenue for the house, which could potentially be taxed.
 
the play involved produces revenue for the house, which could potentially be taxed.

The play is taxed.
This has always been my main complaint for paying taxes on gaming winnings. I already payed a tax when I placed my wager. I should not be taxed again on my winnings. This is double taxation IMO.
 
The play is taxed.
This has always been my main complaint for paying taxes on gaming winnings. I already payed a tax when I placed my wager. I should not be taxed again on my winnings. This is double taxation IMO.

I am not sure what you mean when you say you paid a tax when placed a wager? Are you saying the paycheck you used to gamble has already been taxed?

Of course nobody is a fan of taxes on winning, but the government considers it earned income when its a jackpot of $1200 or more. The good part is if you do lose, you can write off the losses up to your winnings.

Thank god they don't tax table games though!
 

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