Does a 1042-S Go on Your Canadian Tax Return?

On this page

1. What the casino 1042-S is and why it arrives after tax season starts
2. What the CRA says about U.S. gambling winnings on the T1
3. Why line 40500 gives no foreign tax credit for the 30%
4. Why a 1042-S looks like a T1 entry
5. Where the withholding is claimed back
6. Why table game wins rarely appear on a 1042-S at all
7. Side by side: the 1042-S on the T1 versus the 1040-NR
8. What a claim needs beyond the 1042-S
9. Frequently Asked Questions

You won at a U.S. casino, the casino withheld 30%, and a Form 1042-S arrived early the next year. Now the T1 is open, and it feels natural to look for a spot for the 1042-S, with the income in one place and the tax as a credit in another. The CRA generally treats casual gambling winnings as not taxable, so there is nothing to enter. This article explains why the form stays off the T1 and where that 30% can be claimed: on a U.S. return filed with the IRS.

What the casino 1042-S is and why it arrives after tax season starts

On the day of a win, a non-resident who is paid a jackpot by hand usually signs some paperwork at the cage and leaves with a payout receipt. That receipt shows the date, the amount won and the U.S. tax the casino held back. It is useful as a record of the event. It is not Form 1042-S. Many Canadians assume the receipt is the tax slip, file it away, and only learn about the real form when an envelope arrives from the casino months later.

Form 1042-S is an annual form. The casino, as the payer, issues one per recipient, per income type and per tax rate for the whole calendar year. If you won three jackpots at the same property in one year, all taxed at the same rate, those wins are normally combined on a single 1042-S. The rules require the payer to furnish it by March 15 of the following year. A non-resident’s gambling winnings go on this form, not on Form W-2G, which is for U.S. persons. The guide W-2G vs. 1042-S: which one did you get? covers that difference.

The figure most people look for on the form is the total U.S. tax withheld. That is the money taken at the cage, added up for the year. Keep the form with the payout receipts from each win, since the two documents should match.

The March 15 date explains the timing problem. By the time the 1042-S arrives, the Canadian filing season is already under way, and many people are entering slips into tax software or handing a folder to a preparer. A U.S. form showing income and tax withheld lands in the middle of that, and it looks like something that belongs on the T1. The sections that follow explain what the CRA actually says about it. For more on the form itself, see What Is IRS Form 1042-S?

What the CRA says about U.S. gambling winnings on the T1

The Canada Revenue Agency addresses this on its page Canadian residents going down south, dated January 20, 2026. The page tells Canadian residents not to report U.S. lottery or gambling winnings on their Canadian return. The reason it gives is short. In the page’s words, these winnings are “not taxable in Canada.” The instruction applies to the T1 a Canadian resident files for the year the win took place.

For the 1042-S, the result follows directly. No figure from the form is entered on the T1. The gross winnings are not added as foreign income, and the U.S. tax the casino withheld is not entered anywhere on the Canadian return. The 1042-S belongs with the U.S. paperwork. It records what the casino paid and what it withheld and sent to the IRS, and that record matters only on the U.S. side.

The CRA rule covers Canada’s treatment of the winnings and nothing more. It does not deal with the 30% that was withheld under U.S. rules, and it does not move that withholding onto the Canadian return in any other form. Any claim for that money is made through the U.S. filing process, which later sections explain. For a closer look at how the CRA treats the winnings themselves, see the CRA rules on U.S. gambling winnings.

Why line 40500 gives no foreign tax credit for the 30%

Line 40500 is where the federal foreign tax credit lands on the T1. The amount is worked out on Form T2209 and carried over. The credit exists to relieve double taxation, meaning income taxed once by a foreign country and taxed again by Canada. That purpose sets its main condition. A credit is available only for foreign tax paid on income that Canada is also taxing, so the foreign income has to be included in income on the Canadian return.

The calculation on Form T2209 shows the condition at work. The credit is limited to the lesser of two amounts: the foreign tax paid, and a share of basic federal tax. That share is found by dividing net foreign income by net income and multiplying the result by basic federal tax. U.S. gambling winnings are left off the T1, so the net foreign income from them is zero. The fraction becomes zero, and the credit for that income is zero, whatever the 1042-S shows as withheld.

This is the mechanism behind the CRA’s statement that no credit is allowed for tax withheld on these winnings. Canada does not tax the income, so there is no double taxation for line 40500 to correct. Adding the winnings to the T1 to produce a credit would mean reporting income the CRA says is not taxable in Canada. The 30% withheld therefore stays inside the U.S. system, and the route to ask for it back is a U.S. return, explained in how Form 1040-NR works for Canadian casino winners.

Why a 1042-S looks like a T1 entry

Form 1042-S is laid out like an income slip, and that is where the confusion starts. It shows an income code, with gambling winnings using code 28, the gross income paid to you in U.S. dollars, the tax rate (usually 30.00 for a casino win) and the U.S. tax the casino held back. To a Canadian preparer, that looks like a foreign income amount with foreign tax already paid against it.

Canadian tax software tends to follow the same logic. It has a screen for foreign income, which flows to the T1 as other income, and a screen for foreign tax paid, which feeds Form T2209 and the federal foreign tax credit on line 40500. A preparer who keys in the winnings as income and the withholding as foreign tax gets a return that appears balanced. The software has no way to know that these particular amounts sit outside the Canadian tax base.

Under the CRA guidance quoted earlier, neither figure belongs on the T1. The winnings are not taxable in Canada, so entering them adds income that the CRA does not tax. The withholding cannot be claimed either, because the credit on line 40500 depends on the income being reported, and here it is not. Entering both numbers does not cancel out. It produces a return that reports income and claims a credit the CRA does not allow. The CRA’s position is set out in Are U.S. Gambling Winnings Taxable in Canada? CRA Rules.

The form still has a job, just on the U.S. side. A Canadian in this position keeps the 1042-S with their records and leaves it out of the T1 entirely. It is the casino’s record of what you won and what it withheld, and it is the proof the IRS looks to when a claim is made. For a closer look at what the form records, see What Is IRS Form 1042-S? A Guide for Canadian Casino Winners.

Where the withholding is claimed back

The money withheld at a U.S. casino is not recovered through the Canadian return. The 30% rate comes from U.S. federal law, so the claim goes to the IRS on Form 1040-NR, the U.S. income tax return for non-resident aliens. A Canadian resident files it to report the U.S. winnings and to ask the IRS to credit the tax already taken. The 1042-S that plays no part on the T1 is the central document on this return.

The 1042-S serves as proof that tax was withheld, and the IRS can compare it with the 1042-S the casino filed under its own name. The two are expected to agree. U.S. Tax Recovery prepares and files this return for you.

The winnings are reported on the U.S. return, and the tax treaty between Canada and the U.S. lets a Canadian resident deduct documented gambling losses against them, up to the amount of the winnings. The treaty treatment of gambling losses explains how that deduction is measured and supported.

The return works out the tax on the net winnings and compares it with the tax already withheld. If the amount withheld is larger, the difference is shown as an overpayment, and the return asks for it back. That is a request, not a result. The IRS reviews the return and the 1042-S and decides the outcome, which can include changes to the figures or a request for records of losses.

Why table game wins rarely appear on a 1042-S at all

The reason sits in the Internal Revenue Code. Section 871(j) says a non-resident alien’s winnings from blackjack, baccarat, craps, roulette and the big-6 wheel are not subject to U.S. tax. With no tax due on those wins, there is nothing for the casino to withhold. The 2026 Instructions for Form 1042-S follow the same rule and exclude proceeds from those five games from reporting. A casino applying the instructions has no reason to report a table game win or any tax on it.

What the form normally reflects is slots, keno and similar wagers. Those games fall outside the 871(j) exemption, so the 30% rate in the withholding rule applies to them. Casinos usually withhold when a win is paid by hand. If a player had more than one hand-paid win at the same casino during the year, the reported total generally adds up those machine or keno payouts. The payout receipts from the cage help match each amount to the game it came from.

The same exemption carries through to the U.S. return. Table game winnings are left off it entirely, so they are not reported with the other gambling income. If a table game win does appear on the form, that is something to raise with the casino’s tax department. There is more on this in why table games are not withheld like slots.

Side by side: the 1042-S on the T1 versus the 1040-NR

The table below follows each part of the 1042-S through both returns. The first column of results is the Canadian T1, where the CRA guidance quoted earlier leaves the U.S. winnings out. The second is the U.S. return, where the same figures do the work of the claim. Gambling losses are in the table even though they never print on a 1042-S. They come from the winner’s own records, and they only matter on the U.S. side.

The loss row changed for recent years. For tax years beginning after 2025, IRC 165(d) as amended allows only 90% of wagering losses as a deduction. A Canadian who lost as much as they won in a 2026 tax year can therefore still have 10% of the winnings left as taxable income. Some of the withholding may stay with the IRS. Earlier tax years follow the rule that applied to them.

Two things carry most of the weight on the U.S. side: the 1042-S and the record of losses. A casino win-loss statement is common support, but the IRS standard is an accurate diary or similar record backed by tickets, receipts or statements. The IRS reviews the claim and decides the result.

What a claim needs beyond the 1042-S

Form 1042-S proves the withholding, but the IRS also needs to know who is claiming it. A Canadian casino winner usually has no U.S. Social Security number, so the claim uses an Individual Taxpayer Identification Number, or ITIN. Someone making a first claim generally does not have one yet. The ITIN application asks for proof of identity and foreign status, most often a passport. More on who qualifies is in Do you need an ITIN?.

The identity documents are where many claims stall. U.S. Tax Recovery is an IRS Certifying Acceptance Agent, listed on the IRS’s Acceptance Agents directory for Canada. A Certifying Acceptance Agent can review the passport and certify it, so the original does not have to be mailed. That is a credential, not an IRS endorsement, and U.S. Tax Recovery is not affiliated with the IRS. It prepares and certifies the documents. The IRS reviews them and decides the result.

Two questions usually follow. The first is how long it takes. The IRS sets the pace, and it varies from case to case, so no fixed timeline applies. The second is how far back a claim can go. The time limits depend on the tax year involved and are checked case by case before anything is filed. Readers with wins from earlier years can see how that review works in claiming a refund for past years.

Frequently Asked Questions