Gambling Winnings Income Tax Form

Gambling Winnings Income Tax Forms

Gambling Winnings (Income Code 28)

In general, nonresident aliens are subject to NRA withholding at 30% on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty. However, a recent change in the law provides for an Exclusion of Certain Horse-Racing and Dog-Racing Gambling Winnings from the Income of Nonresident Alien Individuals. The winnings and the tax withheld are reportable on Income Tax Form 1042 and Income Tax Form 1042-S

No income tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. An Income Tax Form W-8BEN is not required to obtain the exemption from withholding, but an Income Tax Form W-8BEN may be required to inform the withholding agent that the person is a foreign person, that is, Income Tax Form 1099 reporting and backup withholding would not be applicable. When a Form W-8BEN is submitted to the withholding agent solely for the purpose of identifying the payee as a foreign person, a TIN is not required on such Form W-8BEN.

Most gambling winnings are subject to reporting on Form 1042-S. However, proceeds from a wager placed in blackjack, baccarat, craps, roulette, or big-6 wheel are not amounts subject to reporting.

On their U.S. federal individual income tax returns, nonresident aliens are taxed at graduated rates on net gambling income won in the U.S. that is effectively connected with a U.S. trade or business.

In an effort to assist you to better understand,

TaxACT has made it simple to complete your gambling tax forms, asking easy-to-follow interview questions while it automatically calculates for you.

To view details using TaxACT:

Start or continue your tax return
On the Tabs, mouse-over "Federal Q&A", "Other Income" and then click on "Gambling Winnings"

Tax Treaties

Gambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.

Claimants must give you an Income Tax Form W-8BEN (with a valid U.S. Taxpayer Identification Number (TIN)) to claim treaty benefits on gambling income that is not effectively connected with a U.S. trade or business.

Expedited TIN

Regulations generally provide that a taxpayer identifying number (TIN) must be furnished on a Form W-8BEN or Form 8233 in order for a foreign individual to obtain the benefit of reduced withholding under an income tax treaty. The U.S. Treasury Department and the IRS are aware of certain unusual cases in which an unexpected payment to a nonresident alien individual claiming treaty benefits arises on short notice. In general, a foreign individual receiving such an unexpected payment currently may be unable to obtain a TIN prior to payment. In such a case, unless the foreign individual already has a TIN, the withholding agent would be required to withhold tax at the 30 percent rate, rather than the treaty rate, and the foreign individual would be required to file for a refund in order to obtain the benefits of the income tax treaty. To alleviate this filing burden on foreign individuals, IRS has put in place administrative procedures that will allow certain withholding agents, who also are acceptance agents and who make unexpected payments to foreign individuals, to apply for and obtain an individual taxpayer identification number (ITIN) for such individuals on an expedited basis. See U.S. Taxpayer Identification Number Requirement for when you can accept a Form W–8BEN without a TIN.

Refer to Treasury Decision 8977, Treasury Decision 9023, and Treasury Regulation 1.1441-6 for more information.

Note: This page contains one or more references to the Internal Revenue Code (IRC), Treasury Regulations, court cases, or other official tax guidance. References to these legal authorities are included for the convenience of those who would like to read the technical reference material. To access the applicable IRC sections, Treasury Regulations, or other official tax guidance, visit the Tax Code, Regulations, and Official Guidance page. To access any Tax Court case opinions issued after September 24, 1995, visit the Opinions Search page of the United States Tax Court.