US/Canada Treaty and Gambling Losses -

My_question_is: Applicable to both US and Canada
Subject:        US/Canada Treaty and Gambling Losses
Expert:         taxman at centa.com
Date:           Monday January 22, 2007
Time:           09:39 PM -0500
QUESTION:
Hello,
I am a Canadian citizen and resident and while on my trip to Florida I won
$87000 on a $2 bid. They deducted 30% of final win and now I am trying to
claim under US/Canada Tax treaty for gambling.
A friend told me that since I only spent $2 that I wouldnt classified or
receive Cash Back.
Please Help,
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david ingram replies:
If you could show that you had lost $20,000 (before or after the win) in the
same calendar year, you would get back $6,000 by filing form 1040N.
If you could show that you had lost $40,000, you would get back $12,000 by
filing form 1040NR.
If, like me, you bet $10.00 a year, there is no refund.
Sorry -
The following may explain it a little better.
=============================
older answer
For non-residents of the United States, the withholding is 30% of wins of
$1,200 or more.  You would file a 1040NR to report the winnings and claim
your losses as itemized deductions.
Remember that reporting just your win of $2100 and claiming gambling losses
does not make sense.  If you won $2,100 (or any other amount) and lost that
much, there were more winnings in between which should be reported even if a
slip was not issued.
Non-residents do not usually get a W2-G - they are issued a 1042-S
david ingram
IRS TAX TIP 2004-33
GAMBLING INCOME AND EXPENSES
Hit a big one in 2003? With more and more gambling establishments, the IRS
reminds people that they must report all gambling winnings as income on
their tax return.
Gambling income includes, but is not limited to, winnings from lotteries,
raffles, horse and dog races and casinos, as well as the fair market value
of prizes such as cars, houses, trips or other noncash prizes.
Generally, if you receive $600 ($1,200 from bingo and slot machines and
$1,500 from keno) or more in gambling winnings, the payer is required to
issue you a Form W-2G. If you have won more than $5,000, the payer may be
required to withhold 27% of the proceeds for Federal income tax. However,
if you did not provide your Social Security number to the payer, the
amount withheld will be 30%.
The full amount of your gambling winnings for the year must be reported on
line 21, Form 1040 or the equivalent line on form 1040NR. If you itemize
deductions, you can deduct your
gambling losses for the year on line 27, Schedule A (Form 1040). You
cannot deduct gambling losses that are more than your winnings.
It is important to keep an accurate diary or similar record of your
gambling winnings and losses. To deduct your losses, you must be able to
provide receipts, tickets, statements or other records that show the
amount of both your winnings and losses.
For more information on record keeping, see IRS Publication 529,
"Miscellaneous Deductions," or Publication 525, "Taxable and Non-taxable
Income." You may also want to check out Form W-2G or Form 1042-S and its
instructions and
Tax Topic 419, "Gambling Income and expenses." All are available on the
IRS Web site at www.irs.gov. You may also order free publications and
forms by calling toll free 1-800-TAX-FORM (1-800-829-3676).
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David Ingram's US/Canada Services
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