When a non-U.S. resident (nonresident alien) wins a gambling prize in the United States, specific tax rules apply. Winnings are often subject to withholding, reporting, and filing requirements under IRS law. Here’s what you need to know.
Taxation Rules for Non-U.S. Winners
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Withholding Tax
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Gambling winnings for non-U.S. residents are generally subject to a flat 30% withholding tax.
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The tax applies to the gross amount of the prize, not the net after deductions.
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Certain exceptions apply if a tax treaty reduces or eliminates the withholding rate.
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Form W-8BEN Requirement
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Winners must complete Form W-8BEN, Certificate of Foreign Status of Beneficial Owner, to provide details for tax withholding.
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If a treaty applies, the form is used to claim a reduced rate or exemption.
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Reporting Requirements
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Casinos and gambling establishments must report the winnings to the IRS using Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding).
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The non-U.S. resident winner also receives a copy of Form 1042-S.
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Non-Taxable Games
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Certain games, including blackjack, baccarat, craps, roulette, and big-6 wheel, are exempt from U.S. withholding and reporting for nonresident aliens.
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Filing a Tax Return
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Non-U.S. winners may file a U.S. tax return (Form 1040-NR) to claim gambling losses or request a refund of excess withholding.
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Refunds are only available for residents of treaty countries.
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Treaty Considerations
The U.S. maintains tax treaties with several countries (such as Canada, the U.K., and Germany) that may reduce or eliminate gambling taxes. Winners should verify their country’s treaty status to determine their tax liability.
Example
If a Canadian resident wins a $10,000 prize at a U.S. casino:
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$3,000 (30%) is withheld unless a treaty reduces the tax.
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The casino reports the prize on Form 1042-S.
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The winner can file Form 1040-NR to claim gambling losses or request a refund under treaty provisions.
File Form 1042-S Easily
If your casino or organization must issue Form 1042-S, our 1042-S software makes it simple. You can prepare, print, and e-file directly with the IRS — or we can e-file on your behalf.