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Old 07-17-2008, 09:42 PM   #1
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canadian & U.S. poker winnings taxes

i was reading the globe and mail recently and they had an article about canadians getting their taxes back from the IRS after vegas casinos had withheld on significant tournament profits/winnings.... i apologize that as of right now that i can't find the link. but i will keep looking.

anyway the article seemed to suggest that you had to properly document to the IRS that you had poker losses to offset the winnings and therefore your net poker income is zero.

but i had just assumed canadians could get the money back because we aren't subject to U.S. tax.

of course, in my analysis, things are complicated by the fact you probably don't have to pay canadian taxes if poker is just a hobby and you have a full-time well-paying job. so it's not like the IRS will look at it that you'll be paying taxes on the poker to revenue canada... AND, i would have thought that your poker losses offsetting aren't that relevent when you're making $60K+ in some full-time job.

anyway, can someone clarify or point me to a revelent thread. i've looked and most threads are about paying taxes to revenue canada on poker winnings.

i want to play a couple of wsop events next year and i don't want some unforeseen huge headache if i happen to do well

thanks in advance!!!
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Old 07-17-2008, 10:10 PM   #2
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Re: canadian & U.S. poker winnings taxes

Here's the website of one of the biggest refund companies:

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http://www.refundmanagement.com/home.php

---

From the website:

"Can I apply my losses to help reduce the taxation on winnings?"

Other countries such as Canada entered into a treaty with the USA in 1996 whereby specific gaming losses can be applied against winnings to reduce or eliminate taxes on gambling winnings. The IRS expects losses to be substantiated by proper record-keeping and acceptable receipts.

---

One thing, the website doesn't mention what percentage of your money they keep - but it's got to be less than 30%.
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Old 07-17-2008, 10:26 PM   #3
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Re: canadian & U.S. poker winnings taxes

brooktrout, thanks.......... but what are these services (which i've heard are useful) providing? i mean, am i not the one who does most of the record keeping work which is probably the most important part??.... and what if you're a winning player? you won't have losses to offset. FWIW, my poker wins/losses would be completely inconsequential vs. a $20K cashout at the wsop

and do the poker losses have to be in the USA too?

i will check out the link. thanks again!!
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Old 07-18-2008, 09:50 AM   #4
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Re: canadian & U.S. poker winnings taxes

Quote:
Originally Posted by smbruin22 View Post
anyway the article seemed to suggest that you had to properly document to the IRS that you had poker losses to offset the winnings and therefore your net poker income is zero.
I think that is accurate. I am not Canadian so I ain't got any first-hand experience with it, but I've read a couple blurbs including straight from the US IRS and it pretty much says EXACTLY that. You can file a US non-resident tax form and basically go through all those gyrations and declare the US poker winnings, deduct your documented US losses, and file for a refund.

http://www.irs.gov/businesses/small/...106252,00.html
Quote:
Gambling winnings of Canadian residents are subject to NRA withholding at 30% on the gross proceeds from gambling won in the United States. However, Article XXII of the Canada - U.S. Income tax treaty entitles residents of Canada who are taxable by the United States on gains from wagering transactions to deduct U.S. source losses from U.S. source wagering transactions. Canadian residents should file Form 1040NR (PDF) to obtain a refund of U.S. taxes withheld from the gambling winnings, if applicable.
Quote:
what are these services (which i've heard are useful) providing?
Far as I know, they fill out the 1040NR form for you using whatever documentation you provide them. Sounds like 10 minutes of work if you know what you're doing. Unfortunately, if you don't know what you're doing, the 1040NR looks painful to navigate. I'd think if you saw an example of a simple one filed just for gambling income, though, you'd be able to trivially do it yourself.
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and do the poker losses have to be in the USA too?
"U.S source wagering transactions". Sorry.
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Old 07-18-2008, 10:51 AM   #5
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Re: canadian & U.S. poker winnings taxes

Quote:
Originally Posted by smbruin22 View Post
i was reading the globe and mail recently and they had an article about canadians getting their taxes back from the IRS after vegas casinos had withheld on significant tournament profits/winnings.... i apologize that as of right now that i can't find the link. but i will keep looking.

anyway the article seemed to suggest that you had to properly document to the IRS that you had poker losses to offset the winnings and therefore your net poker income is zero.

but i had just assumed canadians could get the money back because we aren't subject to U.S. tax.

of course, in my analysis, things are complicated by the fact you probably don't have to pay canadian taxes if poker is just a hobby and you have a full-time well-paying job. so it's not like the IRS will look at it that you'll be paying taxes on the poker to revenue canada... AND, i would have thought that your poker losses offsetting aren't that relevent when you're making $60K+ in some full-time job.

anyway, can someone clarify or point me to a revelent thread. i've looked and most threads are about paying taxes to revenue canada on poker winnings.

i want to play a couple of wsop events next year and i don't want some unforeseen huge headache if i happen to do well

thanks in advance!!!
I would consult my tax professional (ie accountant) and not rely on information from an internet forum.

If you had enough winnings to get witheld, I would assume the $100-$200 it would cost to consult a professional would be worth it.
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Old 07-18-2008, 07:15 PM   #6
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Re: canadian & U.S. poker winnings taxes

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Originally Posted by Beaudog View Post
I would consult my tax professional (ie accountant) and not rely on information from an internet forum.

If you had enough winnings to get witheld, I would assume the $100-$200 it would cost to consult a professional would be worth it.
i appreciate the advice.......... but my question is really very basic: do we get the money back because we're canadian? and it seems the answer is NO, which surprises me.
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Old 07-19-2008, 12:25 AM   #7
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Re: canadian & U.S. poker winnings taxes

A number of countries have special tax treaties with the US government that allow them to be exempt from the 30% withholding. Unfortunately, Canada is not one of them.

Yes, the answer is that the IRS gets to keep what was withheld (30%) unless you file the 1040NR (which most competent accountants in Canada can do for you, once you get your ITIN ... you did fill out the W-7 at the cashier's cage, right?).

If you've managed to lose more than a few thousand (for example, if you've donked off a Main Event entry after a cash ...) it is probably *less* expensive to go through an accountant at $250/hour to do the paperwork for you than Refund Management and their ilk (who charge 30% of your refund).

All of the details on what your gambling log (to justify your claim is) can be found in Poker Legislation. Be thankful for those darn loyalty cards if you're a slots player!
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Old 07-19-2008, 12:30 AM   #8
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Re: canadian & U.S. poker winnings taxes

And one last basic answer: Yes, you still owe 30% tax on your *net* gambling wins in the United States for the calendar year. The 1040NR allows you to specify, for the IRS, what your net gambling income was (as transacted within the borders of the USA). If you lose $1000 in a cash game in Calgary, they don't care. If you do it in Reno, they care.

Just remember to include all of your wins and losses in the report. Don't get selective memory about your cash game victories versus crystal clear detail about every loss. :-)
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Old 07-19-2008, 02:13 AM   #9
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Re: canadian & U.S. poker winnings taxes

slightlymad, thank you very much!!!

so if i go down to vegas, play only one tourney (assume only time i play poker in usa), make $10K to $500K ("i like dreaming"), i basically owe that tax that the casino withholds. sounds like it
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Old 07-19-2008, 05:42 PM   #10
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Re: canadian & U.S. poker winnings taxes

Yes, that's correct. However, there's a nice benefit to a big tournament score -- every tournament that you enter for the rest of the year in the US is 30% off.
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