A client won the lottery in the US, of course 30% was deducted. The client want to recoup the taxes deducted. Since lottery is tax free in Canada, will the client have to file a US tax return? Client doesn’t have any other US income.
I’ve had several of these. He will have to get a TIN (tax identification number) which is a bit of red tape as he has to send his passport or certificate from the passport office which will be returned with the application for the TIN. One received, he will prepare a 1040NR tax return. No personal exemptions are allowed so the winnings will be taxed at the tax rate for the income. If he can document the money he lost, it can be deducted.
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Thanks benoit.associes1!
seems like they tax canadians at 30%
I don’t think they can recoup the taxes paid, from the US side, there maybe deduction if there are well documented costs /losses related to the winning.
I didn’t actually do one, after I read about, and there is no point to claim it on the Canadian tax return, lottery winning is tax free, so after calling to CRA on that, there is no tax credit on that either.
They tax gambling winnings at 30% for non-residents.
Canadians are permitted to deduct gambling losses. All others are S.O.L.
MODIFICATION: Deduct the losses on the US return.
Canadians can claim gambling losses on a US tax return?
Expenses spent to earn taxable income can be deducted from the income. In this case only money spent gambling applies but it has to be well documented with receipts…
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I would assume that TimParris meant that Canadians are allowed to deduct their expenses on the US tax return.
Canadians are only allowed the expenses if the gambling proceeds are considered business income.