U.S. Casino Tax Refund for Australian Visitors

On this page

1. Why the IRS Withholds 30% From Australian Gamblers’ Winnings
2. The tax treaty between Canada and the U.S. Advantage: What Article XXII Does
3. Where the U.S.-Australia Tax Treaty Falls Short on Gambling Income
4. What This Means in Practice for Australian Visitors
5. Your 1042-S: The Key to Claiming Money Back
6. Do You Need an ITIN?
7. Making the Claim to Recover the Withholding
8. How Gambling Losses Can Still Reduce Your Tax Liability
9. What to Expect After a Claim Is Filed
10. Frequently Asked Questions

If you are an Australian who has hit a jackpot in Las Vegas, Reno or Atlantic City, you have probably watched the casino hand you a slip showing 30% withheld before you saw the cash. A well-meaning friend may have mentioned that Canadians do not have this problem. They are only partly right. Canadians have the same 30% withheld, but one clause in one treaty lets them deduct their U.S. gambling losses for the whole year, and Australia’s treaty does not have it. This guide explains why the withholding happens, why Canada’s treaty language does not extend to Australians, and how an Australian visitor may still be able to recover some of it.

Why the IRS Withholds 30% From Australian Gamblers’ Winnings

Under U.S. tax law, nonresident aliens are taxed on U.S.-source income, and gambling winnings count as U.S.-source income the moment you win them at a U.S. casino, sportsbook or racetrack. The IRS requires casinos to withhold 30% at the source for nonresidents whenever a payout triggers reporting. That is typically slot jackpots of $2,000 or more for payments made in 2026 (it was $1,200 before), keno wins of $2,000 or more (it was $1,500), or poker tournament payouts above the poker threshold. The withholding is reported to you on Form 1042-S, not the W-2G that U.S. citizens receive.

The 30% rate is not a penalty aimed at foreigners. It is the default statutory withholding rate under IRC Section 1441 for most U.S.-source income paid to nonresident aliens, and it exists because the IRS has no other reliable way to collect tax from someone about to fly home. For a U.S. citizen, gambling losses and winnings are reconciled once a year. For a visitor, the IRS takes its cut immediately and leaves it to be sorted out afterward whether you owed that much.

The tax treaty between Canada and the U.S. Advantage: What Article XXII Does

This is what makes Canada’s situation unique. Article XXII, paragraph 3, of the tax treaty between Canada and the U.S. specifically addresses gambling income and allows Canadian residents to deduct U.S. gambling losses against U.S. gambling winnings when calculating their U.S. tax. No other country’s treaty with the United States spells that out as explicitly. It is the basis for the tax treaty between Canada and the U.S. gambling benefit that lets Canadians with documented losses recover some or all of the 30%.

A Canadian who won $10,000 at a slot machine but lost $12,000 over the same trip can point to that article and show a net loss, which would mean the $3,000 withheld could come back. Other nationalities have had to establish a comparable path through case law instead, which brings us to Australia.

Where the U.S.-Australia Tax Treaty Falls Short on Gambling Income

The United States and Australia do have an income tax treaty, signed in 1982, in force since 1983 and updated by a 2001 protocol, but it contains nothing comparable to Article XXII. Gambling winnings are not specifically addressed. They fall under the treaty’s general “other income” provisions, which do not override the standard withholding regime the way Canada’s clause does. There is nothing in the treaty an Australian gambler can point to at the cashier’s cage to reduce or eliminate the 30% on the spot.

It is not that Australians are worse off across the board. The “automatic loss offset” Canadians enjoy is simply not written into the Australian treaty. The same is true for the UK, as covered in our piece on how the UK-US treaty differs from Canada’s.

What This Means in Practice for Australian Visitors

None of this means Australians are stuck losing 30% permanently. The withholding happens exactly the same way as it does for Canadians, but recovering it means making a U.S. non-resident claim rather than relying on treaty language to avoid the withholding in the first place. The casino does not know or care about your treaty situation at the moment of payout. It withholds 30% from nearly every nonresident jackpot regardless of nationality, then issues the 1042-S.

Without a treaty shortcut, your case for offsetting losses depends more heavily on your own records, so it helps to hold onto every piece of documentation from your trip, such as win-loss statements, buy-in receipts, ATM withdrawals at the casino and hotel folios showing dates of stay. The IRS sets the pace of any claim, and it varies from case to case.

Your 1042-S: The Key to Claiming Money Back

The 1042-S is the most important document in this process. It shows the gross amount won, the tax withheld and the withholding agent’s information, and the IRS matches any claim against it. Casinos are required to issue it and file a copy with the IRS for reportable gambling payouts to nonresidents, and they have until March 15 of the following year to send yours.

If you have misplaced yours, a duplicate can be requested from the casino’s tax or accounting department, since the IRS will not process a claim it cannot verify against the casino’s own reporting. For a closer look at the form, see our guide to Form 1042-S.

Do You Need an ITIN?

Almost certainly. A U.S. claim needs a taxpayer identification number, and Australian visitors who are not authorized to work in the U.S. are not eligible for a Social Security Number, so the number used is an Individual Taxpayer Identification Number (ITIN). Only the IRS issues an ITIN. A tax recovery firm can prepare the application and, as a certifying acceptance agent, verify your identity documents, but nobody outside the IRS can grant or speed up the number itself.

Making the Claim to Recover the Withholding

With a 1042-S and an ITIN, the claim is made through a U.S. nonresident income tax return. It reports the gambling winnings shown on your 1042-S, claims any offsetting losses, and compares what you actually owed with what was withheld. If the withholding was more than your actual liability, the IRS may refund the difference, typically by check or by direct deposit to a U.S.-accessible account. U.S. Tax Recovery prepares and files this for you.

A lot of legitimate claims go sideways through simple errors such as mismatched withholding amounts or missing details, which is why our post on why getting a casino refund claim right matters is worth a read.

How Gambling Losses Can Still Reduce Your Tax Liability

Even without a treaty provision like Canada’s, Australians are not without recourse. In Park v. Commissioner (D.C. Cir. 2013), the court of appeals reversed the Tax Court and held that nonresident aliens compute their U.S. gambling winnings or losses on a session-by-session basis. The IRS now applies that principle broadly, regardless of the claimant’s home country or treaty. It is a court-established mechanism rather than a treaty right, but the practical effect can be similar. If your losses within the same gambling session equal or exceed what you won in it, you may owe little on that session, and some of the 30% withheld on it may come back. Losses from a different day or session do not count against it.

The catch is substantiation. Without Canada’s treaty language, the IRS leans more on your documentation, such as win-loss statements from the casino’s players club, dated ATM and marker records, and a session log if you kept one. Our guide on using a casino win-loss statement covers this evidence.

What to Expect After a Claim Is Filed

The IRS decides every claim, and it sets its own pace, which varies from case to case. If an ITIN is needed, the IRS reviews that application before it processes the claim. Delays are common when a claim arrives with missing details or insufficient loss documentation, the same issues that slow down Canadian filers, discussed in why IRS refunds get delayed. No preparer can predict what the IRS will decide.

Frequently Asked Questions