Casino Winning Tax
All casino winnings are subject to federal taxes. However, the IRS only requires the casinos to report wins over $1,200 on slots and video poker machines or other games such as keno, lottery or horse racing. When you have a win equal to or greater than $1200, you are issued a W-2G form. This form lists your name, address and Social Security number. Gambling winnings are fully taxable and must be reported by individuals as income on their tax returns regardless of the size of the winnings. Gambling income includes, but is not limited to, winnings from casino gambling (e.g., slots, blackjack, craps, roulette), lotteries, raffles, and horse and dog races.
Tips for Claiming Tax Back from US Casino Winnings
You won big in Las Vegas, Atlantic City, Reno, or one of the other gaming destinations in the U.S. Once you win a jackpot, you’re faced with a very unpleasant revelation: you are immediately taxed on your winnings. However, Refund Management Services advises that there is a way to get all or a portion of your taxes back from the IRS.
You can win a lot of money gambling in the United States. Of course, that means you’re also subjected to a casino winnings tax.
If you’ve made a trip to the U.S. and your gaming winnings are high enough or you win a prize and take the cash equivalent, the IRS will deduct 30% off of your winnings. Nobody wants Uncle Sam to withhold their winnings.
Still, there’s no reason to avoid the gaming tournaments or slots when you’re south of the border. Here is what you need to know about before you travel to the US to gamble and how to claim and get tax back from us casino winnings.
- Once your US casino winnings pass a certain threshold (which differs by casino, but is often $1,199) you will be subject to withholding tax. When this happens, you will be issued a W2-G or 1042-S slip.
- Don’t wait more than three years to claim gaming winnings on a tax return; that said, if you’ve won in the current year, we will be filing a claim at the beginning of the next calendar year. Most of our customers typically contact us within a few days of returning to Canada or their country of origin, so we can begin preparing the paperwork for them to get the refund that is rightfully theirs. If you delay submitting your claim, you won’t be entitled to a refund after 3 years.
- Keep track of all your US wins and losses every time you go, reporting your losses will maximize your return.
- It’s not just US casino winnings that are taxed, other gaming activities can be taxed like lotteries, raffles, and races.
- Remember that you can also claim taxed gaming winnings on a variety of games, such as lotteries, raffles, and horse races.
- When it comes to getting tax back from US casino winnings, you have a few options:
How To Get Tax Back From US Casino Winnings
Nearly four million gamblers win big in gambling cities across the U.S. and the IRS deducts taxes from all of them. However, as a non-resident of the U.S., there is a way to get your casino winnings back from the U.S. by hiring Refund Management Services to go through the process of obtaining a casino winning tax refund from the IRS. RMS is the easiest way to get your money back.
If you win $1,199.00 or more, contact Refund Management Services and we will obtain your taxed gaming winnings by filing a tax return. Take the stress out of the process by letting our trained experts handle it for you!
At the end of the day you have two options:
Option 1: Claim Tax Back from US Casino Winnings On Your Own
It is possible to file your own withholding tax return. While this may save you a small amount of money, it is only advised if you feel confident in your withholding tax filing skills. Much like your annual tax return, with so many opportunities to leave money on the table or make costly mistakes, claiming tax back from US casino winnings on your own can leave you in a costly position. Every year we deal with clients who have been denied their withholding tax refund by the IRS after filing independently. It is complicated, time consuming, and expensive to appeal this decision, so it’s often not worth the risk.
Option 2: Use a Withholding Tax Refund Professional
These folks make it their business to get your tax back from US casino winnings. Although there is a fee associated to using a withholding tax professional, they will ensure you don’t make any costly mistakes. To make sure you make the right choice, look for the following in your withholding tax professional:
1. Relationships with Casinos & Gaming establishments:
To start your claim process, you will need the IRS form 1042 from the casino you were playing in. If you misplaced it, that won’t be a problem for a reputable withholding tax refund professional since their relationship will allow them to easily recover it from the casino you were playing in. Even if you haven’t misplaced your form 1042, this is still a good quality to look for in your withholding tax refund professional.
2. Honest About Your Refund Timing
Although speed is of the essence when you’re looking to get your refund, due to the IRS wait times it is important to know that you’ll be waiting 6 months at a minimum but usually a full year before receiving your US casino winnings tax back. This is AFTER the claim is submitted. Any agency that tells you you could receive your US casino winnings tax back sooner is being misleading to get your business.
3. Agent of the IRS
Agents of the IRS are people or companies that are allowed to certify your ID, a requirement when claiming tax back from US casino winnings. This means one less chore for you when making your claim.
4. Excellent Track Record For Claim Approvals
The firm you use to claim tax back from your US casino winnings should boast at least a near perfect record when it comes to rightful claim approvals.
5. Owned and Operated by a Canadian Chartered Accountant
When claiming your tax back from US casino winnings, ensure the withholding tax specialist is a Canadian chartered accountant. This ensures your return is being handled by people with the appropriate expertise to be handling taxes. It will also provide you with insurance that your sensitive information will be handled professionally.
6. A Withholding Tax Industry Veteran
We are the longest standing withholding tax agency in the industry for a reason. Avoid leaving your refund in the hands of someone less experienced by choosing a withholding tax specialist who is tried, tested, and true.
7. Makes Casino Winnings Tax Refunds Easy
If you find you’re filling out multiple forms, your withholding tax professional is not earning their fee. The point to using a service when getting tax back from casino winnings is that they do all the leg work and make sure it’s done right.
RMS is the leading provider of withholding tax services for non-US residents. Learn why RMS is the right choice for claiming tax back from your US casino winnings and apply now for free.
The Highs and Lows: Gambling Winnings Tax
There is a huge disparity in the quantity of tax collected across legal gambling jurisdictions. In some countries, punters can expect to lose up to 10% of their winnings to the taxman, whereas in other countries this can be between 1-3%. The method of collection varies greatly too, in some countries gambling taxes are collected with stealth and being not directly levied on the winnings, but propagated throughout the platform through various financial engineering methods. Adjusting payout rates is an efficient method for operators in the UK to collect taxes and avoid charging the winnings of customers. The end result is always the same no matter which method is applied, taxes are unavoidable. All we can do as a player at casinos, online gambling platforms, or sportsbooks is to continue to monitor the global markets, picking countries to play that offer the most favorable set of taxation laws for gambling customers.
Top Countries for Low Gambling Taxes
There is a huge financial incentive for countries to maintain a low rate of taxation on gambling, the warmest and welcoming countries to new casinos enjoy huge shares of the profits through indirect means. Gamblers also gain financially. With the gambling winnings tax rate at the countries with the lowest taxes on casino winnings offering players the best deals, international gamblers will intentionally target these locations for huge portions of their play. Of course, the differences are sometimes not so large, and the material differences are only truly felt once you begin betting large sums of money. Below we’ll go into more details on the top countries for low gambling taxes.
Russia
Of all the countries around the world with low taxes levied against gambling, Russia is the most welcoming of all. The Russian government collects 0% on Gross Gaming Revenue (GGR) from operators. Instead, the operators simply have to pay a monthly fee based on the number of gaming terminals, tables, and machines they have within the premises. This method results in a much lower taxation liability for the gambling operators and casinos in Russia, and this favorable set of circumstances is passed down to the customers in the form of much higher payout rates and better returns across the entire suite of gambling products.
However, the laws in Russia are constantly changing and there has been a bill introduced in late 2018 that has the potential to rock the gambling industry in Russia. A new flat tax will be applied to customers making wins over $200, and there has even been talked of doubling the monthly fee rate applied to casinos depending on their gaming capacity. All of these changes are being delicately considered by the government, and consideration is being made towards their effect on foreign investment. In Russia’s far east, ambitious plans for Vladivostok gambling are already in motion to build an enormous casino hub on the scale of Las Vegas, all of which are dependent on foreign investors who are price-sensitive to Russia’s gambling tax laws.
Italy
Italy has a long and fabled history with gambling, and their culture of wagering goes all the way back to the pre-historic times at the birth of the Roman Empire. Citizens of the great Roman dynasty would often play games with dice and other gambling instruments. The oldest casino in the world opened in Venice in 1638, and since then the country has been a welcoming home of gamblers. Since then the industry has rapidly expanded to include a whole range of different gaming options, from traditional land-based casino venues to online gaming operators and sportsbooks. Italy now has some of the most liberal laws towards gambling in the world.
Casino Winning Tax Calculator
The Italian betting tax is one of the lowest levied across the legal gambling world. Most casinos pay 0% on Gross Gaming Revenue, and in a similar situation to Russia, they pay only on the capacity of their casino offerings. Customers who play at these locations enjoy the financial benefits too, and there is very few places in the world where players can get higher value for money on their winnings and book value payout rates than in Italy.
United States
The United States has a complicated relationship with gambling, primarily due to its legal code and system whereby states are able to draw up their own laws and taxes. The Federal Government has legalized many forms of gambling throughout the United States, and they set a low baseline tax rate of around 3%. Besides this, states where gambling is legal levy their own taxes, these can vary from between 2-5% in most jurisdictions. Accounting for both the Federal and State taxes, players can enjoy a relatively low tax on their winnings of around 5% in some parts of the country.
Whilst these rates do seem particularly low, there is a huge variation across some of the states so be careful if you’re planning a trip. For the lowest gambling taxes in the United States, you’ll want to head to either Nevada, New Jersey or South Dakota. Good news for Las Vegas enthusiasts as the Sin City is subject to a relatively low tax rate compared to the rest of the country. Gambling in the United States comes with a whole host of additional amnesties and luxury extras that you won’t find elsewhere around the world, and overall it can be considered one of the best countries in the world to gamble.
Casino Winnings Tax Limit
Countries with High Gambling Taxes
Whilst there are several places a thrifty gambler would enjoy due to lowered levied tax on winnings, equally countries with high gambling taxes are worth being aware of and avoiding at all costs. The following three countries have been picked out for their especially high Gross Gaming Revenue (GGR) tax rates, meaning your net profits will be seriously affected whenever playing in these jurisdictions.
Germany
German gambling has been fully legalized for a long time and citizens can enjoy a whole host of gaming options both in-person and online. The country is packed full of casinos, poker rooms, and bookmakers, with large budgets allocated to marketing and the development of new gaming technologies across the country. For all these reasons many people in Germany gamble, but unfortunately, the tax code is harsh towards the industry in Germany, and customers here are usually getting prices far below the average market rate.
Gross Gaming Revenue (GGR) taxes can be as high as 90% on some casino operators. But in reality, it is much lower. Even so, the high GGR rate ensures that casino profits are shaved down to a very fine margin. All of this additional liability is passed on to the customers who have to pay a percentage of their winnings in taxes. At most online sports betting sites in Germany, the bet slips will display the gross winnings, to calculate the net you can usually discount at least 5% from this total amount on each bet.
United Kingdom
Perhaps the country with the most intimate relationship with gambling in the world, the British have a highly liberal and celebrated approach towards the gambling industry. Even the great Winston Churchill loved gambling, and would often go deep into the night playing cards and plotting his war strategies with his top generals. Whilst the market is becoming over-saturated with new operators, the government continues to collect enormous taxes from them.
Gambling operators based in the United Kingdom can pay up to 50% on Gross Gaming Revenue, but in reality, this is much lower. Home to some of the largest and richest gambling operators in the world, the British punters have an excellent range of choices when it comes to online casinos and sports betting. This huge plethora of online gaming options usually allow for top value to be found.
Macau
Asia has several gambling hotspots, but none amongst them are as popular as the high-roller hotbed in Macau. The coastal city that operators with economic freedom is the only legal place to gamble in China. The Chinese government was only willing to make this concession if the rewards would be plentiful, and indeed the gambling industry in Macau generates huge tax income for the Chinese state.
The highly lucrative business has a tax liability of up to 39% on Gross Gaming Revenue. With massive revenues flowing through their accounts, Macau is one of the richest and most capital intensive gambling industries throughout the world. Most punters are willing to make this trade-off between lower returns and a luxury trip to the glitz and glamour of Macau.
Go High or Go Low?
The question of whether to go high or low is difficult for most countries to contend with when designing their tax code. In order to attract foreign investment and drive growth it is better to start with lower taxes, and once a well-grounded gaming industry has been established, gradually increase the tax rate levied. This approach is being utilized across the world and is seeing governments enjoy huge revenues collected directly from the pockets of gamblers.
Frequently Asked Questions
What percentage is gambling winning tax?
This depends massively on where you live. If you are playing at online casinos in the UK, there is no gambling winning tax. But in the USA, the gambling winning tax can be above 20% in some states.
Do I need to declare all gambling winnings?
Just as with what amount gambling winning tax may be, whether or not you need to declare your winnings massively depends on where you live. If you play at real money sites in a country where you need to pay taxes on your winnings, then you need to declare them. Basically, if you need to pay taxes, you need to declare and pay.