As a Canadian you should be able to get that money back. It is held but then you fill out a form to apply for a number that has a name I can't remember at the moment do to lack of sleep. With that number you then fill out a non-resident US tax return and you should get the money back. Or you can pay someone 20% to do it for you. See ads in back of any Canadian magazine or at 4am on local TV.

To further elaborate on Henry's point (I'm pretty sure I did all of this in a post a few months ago):

You need an ITIN (International Tax Identification Number). You can start the process of applying for that right now, if you so desire.

You should have received a W2G for the tax withheld from your win at the Commerce. You will need that to prove *you* had tax withheld. You can fill in a 1040NR (non-resident US tax form) to get documentable US Gambling losses back (go to the Poker Legislation forum in case you're asking about how to document poker cash games properly).

There are places that will fill out a 1040NR for a fixed amount, but the last big name accounting firm I went to wanted more than $1K Canadian to fill it out, so I went with Refund Management Services last year ... which was cheaper.

After having looked at the forms, and having my ITIN already taken care of, I think I can handle my own 1040NR this year. It's just a little more complicated than the standard T4, but you do have to read the 56 page manual that comes with it carefully to avoid making a major mistake on your form. Assume you'll spend 4-6 hours reading the documents and then finding the two boxes to fill in numbers on.

thejayman: Because you're a non-resident and are not doing work in the States (I assume), there is no exemption on your first X dollars of income as there is in Canada. It's 30% of dollar 1 through to 30% of dollar N that is withheld. You should be able to get everything that was withheld back, if you can document that you have *lost* more gambling in the States than you have won.

xx23: If you don't have the W2G, you may want to contact the Commerce directly about getting something official for your taxes, and be prepared to explain to the IRS that this is a copy of the Commerce's version of the form, not the original that they gave you. They *should* have a copy of the W2G on file if they've withheld cash from you.

Thanks for the very informative response
I'll definitely look into it and see if I can do it myself.

The thing is, the government is going to tax any kind of income unless you're below the poverty line so you post anything, doesn't matter on the amount, it's all about the amount combined....

I'm not sure what you're trying to say here. An amount of income is typically only included in income as a legal matter if it's income "from a source" as construed by the courts and/or deemed to be so by the Income Tax Act.

ok, I've read a lot of this thread and basically this all seems clear as mud.

I'd like to pose this question to the board, perhaps I've missed the black and white answer as this thread's inception was in 2004 and it is now nearly 6 years later.

Ok,

A player who plays cash games online makes 1.2 million dollars. The player makes $100k a month playing poker.

This player also has a full-time job.

Would the CRA tax this individual?

Yes; if done consistently and with the goal of making money. The question is how long has the activity been going on? If it's the first or second year, I can produce a very strong legal argument that it should not be taxable. If it's the fifth or eighth year, then there is no question: taxable.

It would be a pretty high probability. Especially after more than one year. It would be pretty difficult to argue that you made $100,000/month consistently without some kind of special skill.

Why does someone who makes $100k a month have a FT job?

Poker sole source of income since the end of 2008. I had a job for most of 2008 but still haven't filed my taxes for that year. I plan on doing so in the next few weeks.

~Juily 2009
Won a 5 figure bad beat jackpot followed by a low 6 figure MTT score a few weeks later.
Withdrew 50-70K to my bank account from online poker.

I wrote student as my occupation on the form for the BBJP and the MTT score, although I am not registered in any schools. Would it be a good idea to register for an online school before the end of 2009?

At the end of the year, I plan on putting the BBJP and the MTT score on paper but I do not plan to pay any taxes on it.

If this gets red flagged would it be possible to say I was in between jobs for a few months, took a trip, won a BBJP (no skill) used that money to buy into a MTT which I won (luck) lived off the winnings. Or even decided to try playing poker full-time only AFTER I got lucky and won a live MTT but failed?

I plan on continuing to play full-time in 2010 fyi.

Thank you,
AW

*EDIT*
I also play live cash games but there is no real trail of this.
Without any big scores (or BBJP ) I plan to make ~70-100K in 2010. I don't mind paying taxes on my gambling winnings in 2010.

Is it possible to say I began playing full-time after I got lucky, lost a lot, trained & learned poker and be considered a "professional" that can be taxed but only months after winning the BBJP/MTT?

Neither of those hits are likely taxable so as long as you can document them you should be fine.

I wouldn't worry about telling people you are a student. I kept using student for years after I left school.

I didn't keep any of the documents that I received LOL.
Can I simply add up BBJP + MTT and write that under lottery winnings field or do I need to send in the documents as well?

Even if I haven't had a job in over a year, withdraw a few thousand a week to my bank account, I have nothing to worry about?

This may be possible; though of course it depends on all the surrounding circumstances, too. It's not enough to assert it, of course, but I do believe that early full-time gains are unlikely to be taxable, whereas predictable medium-long term gains are taxable.

If it was just a matter of claiming funds were from a windfall with no documentation don't you think money laundering would be a lot easier than it is? The onus is on you to establish that the funds were from a windfall source. If you can't establish that then it will be treated as income.

Why would you withdraw a few thousand a week? My guess is that you are trying to avoid showing up on FINTRAC's radar but while doing so might help in that respect spreading out the withdrawing of the funds when you have no documentation that it was from two big windfalls actually acts as evidence against the windfall claim.

It also shows that you were aware of the tax issues and consciously taking actions to avoid. While I don't believe that people should proactively choose to pay income tax on winnings I do believe that unless they actually know what they are doing that they shouldn't do anything that even comes close to appearing to be an attempt to hide the winnings. The best course of action is to behave like you had no idea there was even a tax issue.

I blew through the winnings fairly quickly. (traveling, gambling, reckless spending took 3 months off) I withdraw a few thousand here and there to pay for bills.

If I call the casinos they should still have copies of the documents they can fax me correct?

i have a question, i am about to graduate from college and i have 18k in student loans to be paid and i have all the money to pay it at the moment. ive made all this money playing poker over the last 2-3 years and i didnt pay taxes on these winnings, im not sure how to proceed cause i know i will be audited if i pay it all at once, so should i pay it all at once, and if i do can someone explain how i would give them my information cause my record keeping for my poker winnings isn't the greatest.

Out of curiosity, how do you "know" you will be audited if you pay it all back at once?

You might get audited but nothing about what you said makes you a higher candidate than anyone else. I assume the funds are in a Canadian financial insutition. If so just pay it. I've done a lot worse without getting CRA's attention.

ok i haven't paid any taxes yet but how does it work exactly, you write off professional gambler making 200,000$ in 2009 and they will take out 100k from your bank account in taxes? What if you made 200k, and write off 50k in your taxes, do they actually go in your bank account and check if the winnings correspond or not?

Canada's income tax system is based on voluntary compliance. They only confirm the information that you provide in cases where they decide to audit you.

Based on your post I think you should seek professional assistance on this subject both because you seem to have no familiarity with filing personal income taxes and also because if you are making $200k from poker and you decide to pay income tax on those winnings then there are ways to structure it so as to minimize the amount you pay.

There's little point in this kind of "part complying" unless you have a sound legal argument surrounding why you're doing it. One such might be that you only tipped into being taxable at some point during the year (this would need to be substantiated). As alluded to, there are other things that can be done to effectively result in part taxation involving various intermediary vehicles through which you might structure your play. You should seek professional advice--it'll usually more than pay for itself.

My tax lawyer recommend i pay income tax this year on my poker earnings, He suggested i set up a corporation for writes off and such, my question for you guys who have set it up this way, under what category did you file your company as? i was thinking if i put gambling it would probably a pain to open a bank account for this company

Try holding company.

Does that prima facie impair the ability to claim gains as ABI?

Hmmm this is interesting news. Wasn`t your tax lawyer always advising you not to pay in the past? What has changed?

Well, in previous years i had a business( owned a few cofee shops) and before that i was a student, i recently sold the cofee shops and he thought it would be hard to prove in court that i do Not do this professionally and that's a windfall