The deal with the 30% withholding rate for int'l players...

[teddyFBI]

So I'm Canadian, and when I cashed last week in an event, the payout people told me that one of two things would happen:

i) If I was an American resident and had a SS#, I would get my entire payout, but they would also issue me a W-2 (and also send one to the IRS, obv).

ii) If I was foreign (which I am: Canada), they would immediately take a 30% cut out of the payout (but that depending on my country's tax treaty, I might be able to get it back by filing some forms with them and what not)

OK, both of the above things I was prepared for, but the more I think about it, the more it feels like something's wrong, and I wanted to run it by a forum where some people might be better informed than I. Here's the problem, as I see it:

There are two ways that this problem manifests itself:

#1 - Let's say I buy in to a WSOP tourney for $1,000, and I make the lowest payout cut for a $1,800 payday. Shouldn't they ONLY take a 30% cut of my WINNINGS? (e.g. $800)??? Because when I sat in the Payouts office, I'm 100% sure she did not deduct the tourney entry fee before calculating the 30% cut. In the example above, this would result in a $540 withholding (30% of $1,800), whereas it seems like they really only should have withheld $240 (30% of $800)-- do I have a legit beef or no?

#2 - I think they really should look at my WSOP in the aggregate, before determining what my winnings are (if any), and only THEN take the 30% cut. For example, let's say I cash in a $1,000 buy-in event for $5,000 (for a $4,000 profit). Let's also say that in the next week, I enter 4 more $1K buy-in tournies but don't cash in any of them. So over the course of that week, I paid $5,000 in entry fees and cashed for $5,000 leaving me with zero net profit. I'm of the opinion that they really shouldn't take a 30% withholding of ANYTHING (where's my profit, after all???). But that's not how they operate: they take a 30% cut of my $5,000 payout, actually leaving me *in the negative*, despite me not having made a dime over that week.

Anyway, what say you about the 2 issues above -- do I have legitimate concerns? And more importantly, where can I go to learn more about just how I can get this $ back from the CDN gov?

[gobboboy]

Why do you hate freedom?

[GTL]

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Why do you hate freedom?

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because he's a terrorist? a canadian terrorist?

ps - i heard about this last year and had the exact same question. was the 30% taken out of profit or the total payout? I am american though, so it didn't effect me. good luck finding out some answers.

[woodguy]

The aggregate is your wins/losses for the year. You cannot expect the casino/irs to know or care how much you are playing in the WSOP.

The reason they tax the whole prize you get, and not just the amount over the buy in is because you use your buy in receipt for tax purposes later when you file. Otherwise it would be a double dip.

Keep your buyin receipts and track pit losses (if any) with a player card and you can apply to get some of the $$$ back.

Regards,
Woodguy

[olieovie]

When I stayed in Canada three years ago, I stayed at a hotels in Quebec in Montreal. I told the hotels I was an American citizen and would be applying to the Canadian government to get the non-provincial taxes back. So I said, why not just charge me no tax to begin with and save everybody the extra paperwork. And, believe or not, they said no.

I'm sure you can think of several reasons why the answer "no" makes the most sense.

[Russ Fox]

The US-Canada Tax Treaty specifies this treatment for gambling winnings. The withholding (30%) is out of the gross win, not the net.

You can file Form 1040-NR after the year is over to get back some (to all) of what was withheld. Note that you are supposed to report all of your gambling winnings (including wins where no W-2G/1042-S was issued), but you do get to report your losses (up to the amount of winnings). If you do not have a TIN (taxpayer identification number), you will also have to apply for that concurrent with your Form 1040-NR.

-- Russ Fox

[Triggerle]

Just out of curiousity, how would that work with a jurisdiction that doesn't tax gambling winnings and also has no reporting requirement of them (like Germany)? Is there a field in the form where I can put the fact that gambling winnings are totally off the radar with regard to my country's IRS?

[Rottersod]

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So I'm Canadian...

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That's when I stopped reading. /images/graemlins/wink.gif

Seriously, the WSOP is not an aggregate poker tourney, it is a series of events with their own buy ins and payouts so you you get your winnings withheld for each one. And the IRS (not sure about the Canadian equivalent) only cares about gross earnings unless you qualify as a poker pro in which case you can net your earnings out at the end of the year.

[talentdeficit]

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Just out of curiousity, how would that work with a jurisdiction that doesn't tax gambling winnings and also has no reporting requirement of them (like Germany)? Is there a field in the form where I can put the fact that gambling winnings are totally off the radar with regard to my country's IRS?

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i'd like an answer to this too. i am a uk citizen with a uk passport.

[ryanghall]

That's why after this year I'll be looking to play EPT etc. rather than US tournaments.

Ryan

[zgall1]

Canada doesn't tax gambling winnings either. This is part of the American tax requirements.

[flavio321]

they only take 30% from your winnings? is this the tax rate for US players also? so we get to keep %70 of the total winnings? i remember IRS taking more than that from my reported income.

[Triggerle]

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Just out of curiousity, how would that work with a jurisdiction that doesn't tax gambling winnings and also has no reporting requirement of them (like Germany)? Is there a field in the form where I can put the fact that gambling winnings are totally off the radar with regard to my country's IRS?

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i'd like an answer to this too. i am a uk citizen with a uk passport.

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UK, Australia etc have a dual tax treaty with USA so UNLESS you live here (like this particular Aussie moron, ie me) you just show your passport, sign the tax form, return home and then are subject to the TAX CODE in your resident country..

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So will they pay out in full? Or will they withhold 30% and I then claim the rest of the money without showing any German tax records (like I said, not only are gambling winnings not taxed, you also don't have to declare them when doing your taxes).

[Rottersod]

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they only take 30% from your winnings? is this the tax rate for US players also? so we get to keep %70 of the total winnings? i remember IRS taking more than that from my reported income.

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It's not a tax rate for gambling winnings. The 30% is simply the amount that the US wants withheld.

[SlightlyMad]

If your country is subject to the 30% withholding regulation, you may be able to get that back if and only if you can prove other gambling losses within the USA. For Canadians, your entry fee is a gambling expense.

For example, as a Canadian, I did not cash for $5000 in earlier tournament entries. Let's say that I go down to the Main Event and miraculously win $35000. 30% ($10500) is withheld by the IRS. I do *no* other gambling this year in the US. I'm still required by the US Government to pay 30% on winnings, but they don't know about my expenses! I paid $15000 in tournament fees, so I only had a net profit of $20000. So, I can file with the IRS and receive 30% of the $15000 difference back ($4500), since I'm only subject to 30% tax on the net gambling win over the year. The US Government does not care (if you are subject to 30% withholding) what your government does with your tournament win.

If this is all income under Canadian tax law (let's assume that I do pay ... there's a different thread for whether it is taxable in Canada, don't start that debate here) ... I would claim $35000 in income, $15000 in expenses (tournament fees), calculate my tax rate and get to remove the $6000 US that I paid in US tax. (This is the intent of the US/Canada tax treaty; to prevent double taxation on the same income.) Since Canadian tax is generally higher than 30%, I would have to pay a marginal amount of money to the Canadian Government.

Note the way that a single tournament entry and win is handled. You must pay withholdings on your entry fee, and the only way to get that back is to file the 1040NR.

You must have an ITIN (International Taxpayer Identification Number) or a US Social Security number to file a 1040NR. The admin people at the Rio will help set you up with one if you need one. And remember to save your copies of your tournament receipts; that is your proof (for the IRS) that you actually entered those tournaments!

[PiquetteAces]

I agree with U. What's funny is that: The Venetian don't keep a penny from a dollar if a "foreigner" make a money finish, because they pay in chips. So I ask to the lady who was in charge to fill up my money'finish' paper-tax at the WSOP this: Why U donot do like the venetian ?

#1- That will attract more international players in ur tournies

#2- If I make a money finish of 2k$, the 600$ that U keep, I might have use it to buy in other/bigger tournies that if U wouldn't have kept it.

she told me: That's is not the policy of Harrah's casino to do like that.

- jpp

[jjacky]

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Just out of curiousity, how would that work with a jurisdiction that doesn't tax gambling winnings and also has no reporting requirement of them (like Germany)? Is there a field in the form where I can put the fact that gambling winnings are totally off the radar with regard to my country's IRS?

[/ QUOTE ]

i'd like an answer to this too. i am a uk citizen with a uk passport.

[/ QUOTE ]

UK, Australia etc have a dual tax treaty with USA so UNLESS you live here (like this particular Aussie moron, ie me) you just show your passport, sign the tax form, return home and then are subject to the TAX CODE in your resident country..

[/ QUOTE ]

So will they pay out in full? Or will they withhold 30% and I then claim the rest of the money without showing any German tax records (like I said, not only are gambling winnings not taxed, you also don't have to declare them when doing your taxes).

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they pay germans the full amount.

[kerr]

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Just out of curiousity, how would that work with a jurisdiction that doesn't tax gambling winnings and also has no reporting requirement of them (like Germany)? Is there a field in the form where I can put the fact that gambling winnings are totally off the radar with regard to my country's IRS?

[/ QUOTE ]

i'd like an answer to this too. i am a uk citizen with a uk passport.

[/ QUOTE ]

UK, Australia etc have a dual tax treaty with USA so UNLESS you live here (like this particular Aussie moron, ie me) you just show your passport, sign the tax form, return home and then are subject to the TAX CODE in your resident country..

Joe Hachem paid $0 tax on his $7.5 M but is now a pro so pays taxes

In UK if you consider yourself amateur than there is $0 tax

Unfortunately for me I get tax as I am now USA based

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I don't think you're correct. Hachem didn't pay tax in Australia on his winnings, but he would have paid the 30% withholding tax to the IRS. Australia does not have a tax treaty with the US, and neither does Lebanon. The countries that do, are (http://www.irs.gov/businesses/small/international/article/0,,id=106252,00.html): Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.

What I'd like to know is which passport would be the easiest to obtain?

[kerr]

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Mate, I am an Australian involved in hedge funds operating companies between USA and Australia. WE HAVE A dual tax treaty, EOS, if not E+Y, PWC and every law firm I deal with in NY, Perth and Sydney are crackers

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Fair enough, I don't doubt your expertise. But any chance you can put forward some proof? Are there other countries not listed in the IRS link I provided that may also have a tax treaty?

[gvegas]

I cashed for 35k at the Bellagio cup (5K buy-in)and they only taxed me 9K. So they taxed the net gain.

[teddyFBI]

When I file the 1040-NR with the IRS do I have to declare ALL my gambling winnings from this year, or ONLY those won in the USA? e.g. i spent 3 weeks down here this year for the WSOP...i only have to report my winnings from that time, right, and not the monies i won when I was in Canada the rest of the year...?

[Silent A]

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Mate, I am an Australian involved in hedge funds operating companies between USA and Australia. WE HAVE A dual tax treaty but the "gambling side" is not stipulated because for an amateur (as defined in Australia) there is no reporting requirements, EOS, if not E+Y, PWC and every law firm I deal with in NY, Perth and Sydney are crackers

We just file W8-BEn when we collect and the 30% does not apply. I will ask the Aussie non-pros if they in fact have been paying the 30% with-hold as per your IRS link. I think the answer is no but will find out.

The pros are subject to taX in Australia as per any profession.

Gl all

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That list was for countries that specifically have a gambling income tax treaty.

[teddyFBI]

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When I file the 1040-NR with the IRS do I have to declare ALL my gambling winnings from this year, or ONLY those won in the USA? e.g. i spent 3 weeks down here this year for the WSOP...i only have to report my winnings from that time, right, and not the monies i won when I was in Canada the rest of the year...?

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[1gigRAM]

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I will ask the Aussie non-pros if they in fact have been paying the 30% with-hold as per your IRS link. I think the answer is no but will find out.

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Did you find out about this?

[tuckercat]

as a canadian, they will chop you 30% off the top, but when you get back home, you need to go to your accountant or a place like http://www.ustaxrecovery.com/

they will normally get all of your winnings back minus their fee. when i first went through this process i got my money back in about 4 months. however once you have done this once and have a US tax i.d number, the process takes half the time. i've had 9 cashes in US tournies over two years, averaging 9k per cash, and i would say my average wait time to get my money back is 2 months. i don't really know how winning a large amount (150k +) affects the length of the process... but i've gotten back an aggregate total of 92% of what was witheld. as far as CND government is concerned, you don't pay anything tax on those winnings., even if you're a "pro". it's good to be canadian.

[seemorenuts]

tuckercat, by now you should be able to know the ropes enough to do this yourself without the aid of a fee charging site or service. Am I right?

Moreover, the 30% accrues nominally meaningful interest until paid (4-6% in the old days) and the earlier post by a Canadian seems wrong to me, you don't need gambling losses, and nothing is deducted from the 30% withheld.

For now you don't need to keep expenses and receipts since the Canadian government sees it as a windfall or some variant. Of course, it always helps to keep receipts, as governments change their minds at a moment's notice--and in fact I recall that the situation is very much up in the air, i.e. nebulous at the Supreme Court of Canada level...

BTW, I've noticed in more than one instance US tournaments paying Canadians their entire winnings in cash, 4 figures.

[tuckercat]

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tuckercat, by now you should be able to know the ropes enough to do this yourself without the aid of a fee charging site or service. Am I right?

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ya... i know my tax id, and how to do it all. it's just a matter of filling out a form and sending it to the right location. there's really nothing more to it beyond that. i don't think i would be too comfortable handling this on my own with any kind of a reasonable score (20k+). but for smaller scores, >20k it's a good way to save some loot.

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Moreover, the 30% accrues nominally meaningful interest until paid (4-6% in the old days) and the earlier post by a Canadian seems wrong to me, you don't need gambling losses, and nothing is deducted from the 30% withheld.

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correct. i think it's 4.5 points... i can check on that though.

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For now you don't need to keep expenses and receipts since the Canadian government sees it as a windfall or some variant. Of course, it always helps to keep receipts, as governments change their minds at a moment's notice--and in fact I recall that the situation is very much up in the air, i.e. nebulous at the Supreme Court of Canada level...

BTW, I've noticed in more than one instance US tournaments paying Canadians their entire winnings in cash, 4 figures.

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no receipts needed. any kind of gambling/lottery winnings are tax free. that is standard. as for debate, i don't believe much progress has been made on that. IMO i think canada is going to be a gambling/lottery winnings safe haven for good. as for payouts in cash... was this observed in indian casinos? i believe some stipulations exist in indian casinos where no tax is chopped if you're canadian.