Taxes for Canadians at WSOP (and other tourneys)

[armen13]

WSOP rules indicate
"Foreign residents of U.S. Tax treaty countries: Must provide an individual Tax identification number. Foreign residents of treaty countries not providing an individual tax identification number will be subject to 30% tax withholding."

It also adds

" Tournament staff will assist winning foreign players from United States tax treaty countries in applying for an individual tax identification number."

What is this tax id #? and what implications does it have when filing canadian taxes at end of year?

Searched for this as probably covered before but could not find anything relevant....

[morello]

My advice here is possibly incorrect, but:

If you are Canadian, they will withold 30% of any cash. Other countries (Finland, etc) do not have anything withheld. After the money is withheld, you can reclaim it by contacting a lawyer who files some sort of paperwork, and in a few months you see the money. It will cost like 20-50$ to do the paperwork, I think.

I cashed in an event last year, and after the 30% withholding, got back less than my buyin. Kind of funny, I guess. I didn't bother to fill out the paperwork, but I will probably do so if I still can this year.

Implications as far as Canadian taxes go are probably none. Tournament winnings can be seen as a "windfall" whereas cash games may be seen as "earned income". You really need to speak to a tax lawyer for clarification though.

[armen13]

[ QUOTE ]
My advice here is possibly incorrect, but:

If you are Canadian, they will withold 30% of any cash. Other countries (Finland, etc) do not have anything withheld. After the money is withheld, you can reclaim it by contacting a lawyer who files some sort of paperwork, and in a few months you see the money. It will cost like 20-50$ to do the paperwork, I think.

I cashed in an event last year, and after the 30% withholding, got back less than my buyin. Kind of funny, I guess. I didn't bother to fill out the paperwork, but I will probably do so if I still can this year.

Implications as far as Canadian taxes go are probably none. Tournament winnings can be seen as a "windfall" whereas cash games may be seen as "earned income". You really need to speak to a tax lawyer for clarification though.

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Thanks Morello. I am thinking that the tax id# helps with the paperwork somehow? anyway good luck this year....

[SlightlyMad]

I think that most of this is right; I'm sure someone else knows the laws a lot better than I do.

Canada has a tax treaty with the US which allows Canadians to be taxed at the Canadian rate on our income earned in the US. Unless they can prove/link a payment to a government's citizen with a tax treaty, the US IRS will withhold 30% of the cash, expecting you to pay US tax. You can fill out the non-resident US tax forms to get your money back ... but there is a better way.

The ITIN (International Tax Identification Number) is the paperwork that helps you dodge filling out the 1040. Think of the ITIN as a Canadian Social Security number for a US non-resident; you only have to do it once in your life, and then it is your permanent number (for IRS purposes) forever.

To fill it out outside of the United States, one needs to go to a US Consulate and make an appointment with a US notary public there. Needless to say, for some people, this is a huge pain in the ass. However, most of the LV casinos have a Notary Public on staff for just this purpose (they want foreigners to cash out the full amount of their wins, so they can go home happy and come back next year!)

Note that the Canadian government will be told about your cashes so you can pay the full marginal tax rate on your winnings in Canada; no IRS forms. Even if you decided "screw it, let the US keep the withholding", you still owe taxes to the Canadian government on the amount you would have paid minus the amount the US government withheld, so it really doesn't get you ahead of the game.

With the ITIN, you will get 100% of your money at the cashier's cage when you win a prize, so you have 30% more 5 dollar bills for the Spearmint Rhino. Without it, you will only see 70% of your money at the cashier's desk, and the dancers will be sad.

You don't want to make the dancers sad, do you?

Hope this helps.

[stevepa]

SlightlyMad, it was my understanding that Canada doesn't have a tax treaty with the US and that's why they withhold the 30%. It wasn't on the list of countries with a tax treaty that was at the payout desk. Either way, having 45k withheld is not fun (thinly veiled brag obviously)

[SlightlyMad]

Steve, upon further reading of the tax treaty, it simply attempts to remove double taxation (so you won't pay a gross amount in Ontario as well as the amount withheld in Vegas). The Spearmint Rhino will be a sad place. Thanks for correcting me.

In spite of the fact that they hold on to this, why aren't you an independent contractor or self-employed individual with no "fixed base available in the United States". Don't you just file a Form 8833 with your tax return and ... boo-waa ... you get your withholding back because you should be exempt from US tax on poker playing?

From IRS Publication 901, discussing tax treaties with other countries:

[ QUOTE ]

Disclosure of a treaty-based position that reduces your tax. If you take the position that any U.S. tax is overruled or otherwise reduced by a U.S. treaty (a treaty-based position), you generally must disclose that position on Form 8833 and attach it to your return. If you are not required to file a return because of your treaty-based position, you must file a return anyway to report your position. The filing of Form 8833 does not apply to a reduced rate of withholding tax on noneffectively connected income, such as dividends, interest, rents or royalties, or to a reduced rate of tax on pay received for services performed as an employee, including pensions, annuities, and social security. For more information, get Publication 519.

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[ QUOTE ]

Income that residents of Canada receive for personal services as independent contractors or self-employed individuals (independent personal services) that they perform during the tax year in the United States is exempt from U.S. tax if they do not have a fixed base regularly available to them in the United States for performing the services. If they have a fixed base available in the United States, they are taxed on the income attributable to the fixed base.

Income that residents of Canada receive for personal services performed as employees (dependent personal services) in the United States is exempt from U.S. tax if it is not more than $10,000 for the year. If the income is more than $10,000 for the year, it is exempt only if:

*

The residents are present in the United States for no more than 183 days during the calendar year, and
*

The income is not borne by a U.S. resident employer or by a permanent establishment or fixed base of an employer in the United States.

These exemptions do not apply to public entertainers (such as theater, motion picture, radio, or television artists, musicians, or athletes) from Canada who derive more than $15,000 in gross receipts, including reimbursed expenses, from their entertainment activities in the United States during the calendar year. However, the exemptions do apply, regardless of this $15,000 limit, to athletes participating in team sports in leagues with regularly scheduled games in both Canada and the United States.

Pay received by a resident of Canada for employment regularly done in more than one country on a ship, aircraft, motor vehicle, or train operated by a Canadian resident is exempt from U.S. tax.

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[teddyFBI]

[ QUOTE ]
SlightlyMad, it was my understanding that Canada doesn't have a tax treaty with the US and that's why they withhold the 30%. It wasn't on the list of countries with a tax treaty that was at the payout desk. Either way, having 45k withheld is not fun (thinly veiled brag obviously)

[/ QUOTE ]

Canada most definitely has a tax treaty w/ the US

[DevinLake]

[ QUOTE ]
The ITIN (International Tax Identification Number)

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Can you point me to some good resources on this? I want to learn more about this ITIN.

[SlightlyMad]

Turns out I got the acronym wrong: It's Individual Taxpayer Identification Number. (Most of my misleading info on the ITIN and the tax treaty came from book royalties, which are dealt with differently than independent contracting under the US/Canada tax treaty.)

The first link on Google for ITIN leads you to this:

IRS Web Page for ITIN

[tourney guy]

[ QUOTE ]
[ QUOTE ]
SlightlyMad, it was my understanding that Canada doesn't have a tax treaty with the US and that's why they withhold the 30%. It wasn't on the list of countries with a tax treaty that was at the payout desk. Either way, having 45k withheld is not fun (thinly veiled brag obviously)

[/ QUOTE ]

Canada most definitely has a tax treaty w/ the US

[/ QUOTE ]

As it relates to gampling winnings - IRC (Internal Revenue Code) is clear.....Canada is NOT a treaty country.

For Canadians, 30% is AUTOMATICALLY WITHHELD, and the Canadian Citizen must file a claim for refund to get the money back.

Some Canadian Professionals had filed for and gotten dual-citizenship. This helps a bunch.