Canadian wins US lottery - How does they get back a

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Hi David;
I was wondering what happens tax-wise if a Canadian citizen on
business or pleasure in the U.S. wins a substantial lottery cash
prize.  Would the U.S. / Canada tax treaty allow for recovery of
the U.S. taxes that would be deducted from the winnings??
J XXXXX
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david ingram replies:
If a Canadian wins a lottery or jackpot or anything over $1,200
at a gambling table or bingo, the payer has to deduct 30%
non-resident withholding tax.
The treaty allows you to file a return and claim a refund.
If you bought one ticket and won $30,000 or $1,000,000, they
would simply deduct 30% and that is that.
ON the other hand, if you are a regular gambler, buy thousands of
dollars worth of lottery tickets, etc., you can claim a full or
partial refund.
To claim the refund "all winnings for the year" have to be
calculated and all losses for the year have to be calculated.
Therefore, if you won $30,000 at this particular time and had won
another $10,000 in several smaller amounts (under $1,200 so there
is no paperwork)
you would file a return and report $40,000.  You would then claim
your gambling losses.  If your losses were $20,000 and you were
still $20,000 ahead, you would leave $6,000 of tax (30% of
$20,000) behind and get a refund of $3,000.
If your losses were $30,000, you would leave $3,000 behind and
get a $6,000 refund.
Hope this helps
david ingram - taxman@centa.com
108-100 Park Royal South
West Vancouver, BC, CANADA, V7T 1A2
(604) 913-9133 - (604) 913-9123 www.centa.com
Cell is (604) 657-8451 (10 AM to 10 PM seven days a week)
US/Canada Real Estate Taxation Specialists
US / CANADA / MEXICO
Working Visa and Income Tax Specialists
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