Recovering Gambling Withholdings

AdamR · Post by **AdamR** » Wed Mar 13, 2013 12:55 pm

Hi all,

I've searched the forums here for an answer to my question, but haven't come up with anything related...

I'm a Canadian citizen with no attachment to the US. I won $3,000 in Vegas last year, taxed at 30%, which i'm aware I can get back by claiming gambling losses. Problem is, that I don't really have any. I didn't keep a record of the money I spent, but I came out way ahead, so there's no way i'd get it back on gambling activity alone.

My question is, is it possible for me to declare myself a "professional" gambler in the united states, so that I can use my hotel and trip expenses to offset the tax? The rules on what constitutes a "pro gambler" are really foggy from what I've found, but my logic says this: The entire point of my presence there is to gamble, and make money gambling. Without incurring the hotel and trip expenses that I did, there's no way i'd be able to carry on my business of gambling there, so I should be able to consider those expenses as a business deduction.

Can anyone tell me how to go about making that declaration, and if it would work to help me claim that $900?

Thanks in advance!

-Adam.

nelsona · Post by **nelsona** » Wed Mar 13, 2013 2:18 pm

the IRS views professional gamblers as those who devote a majority of their time and rely on their winnings. $3000 on one week-end wouldn't cut it.

Given you never racked your losses, it is unlikley that your record-keeping (which is another criterion) would indicate that you are running a business.

http://www.smartmoney.com/taxes/income/ ... our-taxes/

So, no, you can't.

ND · Post by ND » Wed Mar 13, 2013 3:59 pm

Forget the prof gambling. you're dealing with only 3k. Just file a 1040NR and claim the exepmtion on the 3k granted to Cdns and you'll get your full refund.

AdamR · Post by **AdamR** » Wed Mar 13, 2013 4:35 pm

ND, i'm pretty sure that gambling winnings don't qualify under that exemption. Gambling Winnings are considered "other income".

I had thought I might argue that the majority of my time in the US was spent gambling, so as far as that country was concerned, i'd be a professional gambler. I wasn't able to find a precedent either for or against this idea.

Thanks to all who responded!

-Adam. [/list]

ND · Post by ND » Wed Mar 13, 2013 5:25 pm

Note regarding companies in Canada who advertise refunds of withholding of U.S. gambling winnings: they may be operating in violation of IRS guidelines governing tax preparers and can be subject to IRS sanctions. One area of violation of IRS rules is that a U.S. tax preparer may only charge a client a contingency fee under limited circumstances. A withholding tax refund claim is not one of them. The second area of violation of the IRS rules governing the conduct of tax preparers was that a few companies insisted that the refunds would go directly to their office so that the firm could get its percentage of the refund before providing the client with the balance. A U.S. tax preparer is prohibited from endorsing or otherwise negotiating any check issued to a client by the U.S. government in respect of a U.S. tax liability. A third area is if excessive deductions, such as for nonexistent gambling losses in same tax year as winnings, are claimed. You sound like you've already taken the steps to protect yourself by not associating yourself with any such company who may prepare your tax return in violation of IRS guidelines that you approve and sign.

nelsona · Post by **nelsona** » Wed Mar 13, 2013 7:02 pm

Adam, as I posted in another thread (our firm blocks urls that have gambling in the content), gambling is what is known as "non-connected income", which means it is reported on the NEC portion of your 1040NR, and is subject to flat tax of 30%. Since the treaty does not allow a lower tax rate (other than the stipulation about recorded losses), there is no exemption.

nelsona · Post by **nelsona** » Wed Mar 13, 2013 7:03 pm

as ND states, most of these firms promising returns of gambling winnings are dodgy at best, and illegal at worst.

Kinda like those firms that would collect tourist GST rebates back in the day.

AdamR · Post by **AdamR** » Fri Mar 15, 2013 9:49 am

Wow,

I'm glad you guys mentioned the gambling tax firms. I'd thought I might bite the bullet and go with RMS, pay their fee off the top and get the balance that way. In fact, I got the forms in the mail the other day. When I called to ask about substantiating losses the girl told me that I should "Just try to think back to my trip and come up with a list of places you gambled at and how much you spent in each place." I could do that, but god knows it won't be too accurate. They're not asking for any other kind of proof...

They also want me to sign a power of attorney form...No thanks.

-Adam.