Casino Tax Recovery: Necessary Forms
Any Canadian who has ever had to file their taxes knows that the process involves a number of forms. These are often confusing, split into sections that may not flow intuitively from one to another, and are given alphanumeric labels that, to someone not fluent in tax forms and procedures, may make it difficult to differentiate between them when asked to find a specific document. Filing for US casino tax recovery is no exception to this rule, requiring two separate forms if you have already obtained an Individual Taxpayer Identification Number, or ITIN, and three forms if you must also request to be assigned an ITIN.
Form 1042-S
The first form required to file for US casino tax recovery is Form 1042-S, which is referred to colloquially as a win slip. If you gamble at a casino in the United States, and win enough that federal withholding taxes are applied, the casino will furnish you with a copy of a completed Form 1042-S. This form will verify the amount of money you won, the amount withheld in federal gambling taxes, the identity of the withholding agent, and, if applicable, the amount withheld in state taxes. You should keep your copy of Form 1042-S for your records, as you can apply for casino tax recovery up to three years after the date of your win.
Form W-7
The second form used in the US casino tax recovery process is Form W-7, which is used to apply to the IRS for an Individual Taxpayer Identification Number. If you’ve applied for and received an ITIN in the past, you are not required to submit Form W-7, as only one ITIN may be issued to any single individual. If you are eligible for a US Social Security Number, or SSN, you should also refrain from filing Form W-7, as regulations prohibit an individual from having both an ITIN and an SSN. If you’re not certain whether you meet the eligibility criteria for an ITIN, you can consult with someone versed in the IRS’s regulations and procedures before filing any paperwork.
The purpose of Form W-7 is to establish an applicant’s identity, as well as their status as a non-citizen or non-resident of the United States. To ensure that the identifying information given is correct, Form W-7 must be accompanied by valid identification documents issued by the applicant’s country of origin.
If this seems overwhelming, you can visit an IRS-authorized Acceptance Agent to walk you through the application procedure, and to file Form W-7 on your behalf. This may be a great deal easier than attempting to navigate the forms and documentation yourself, and, even better, will leave one less item to fill your busy schedule.
Form 1040NR
The third, and most critical, form used in the US casino tax recovery process is Form 1040NR. This form is your US Nonresident Alien Income Tax Return form, and it will cover all casino withholding taxes you’ve paid throughout the calendar year.
Provided you aren’t a gambler by profession, the gambling winnings withholding taxes you’ve paid will be covered by Schedule NEC, which covers all taxes on income not connected with any US trade or business. If you are a Canadian citizen, you may deduct your gambling losses from your gambling winnings, up to the amount of your gambling winnings, and report the difference. A net loss is not, unfortunately, deductible. Non-US citizens from a country other than Canada may not deduct their gambling losses, and so the manner in which a they would file for casino tax recovery differs slightly, though the form used is the same.
Because Canadians can deduct their gambling losses, it is best to keep a journal or other record to track the amount you’ve won and lost throughout the year while gambling in the United States. Receipts, bank statements, and statements issued for electronic cards used within a given casino are all simple and valid methods of keeping track of your wins and losses.
Because the intricacies of the US tax return forms and procedures can be confusing and difficult to navigate, especially for a non-US citizen who interacts only rarely with the IRS on any level, it is recommended that you engage the services of a refund management firm, such as US Tax Recovery. A refund management specialist can explain the necessary procedures, and assist you in filling out the required forms quickly and correctly. The diminished wait time, not to mention the much lower degree of frustration, achieved by seeking professional assistance is often well worth the cost of services.