Forget Las Vegas, Canada casinos don’t tax gambling winnings.
We Canadians love to travel as much as anyone. Taking a vacation south of the 49th parallel isn’t uncommon. When the winter weather sets in, a warm destination like Las Vegas may sound tempting, but don’t do it!
There’s one very good reason why Canadians should never gamble at US casinos. If you win a sizable amount of cash, you’ll be taxed for it. So if you plan to do any form of wagering, stay home. Otherwise, plan a different vacation that doesn’t involve gambling.
Canada Casinos Don’t Tax Gambling Winnings
Being a native of Canada, it’s hard to imagine having your gambling winnings taxed by the government. It’s never happened here, and that isn’t likely to change in the future. Canada, like most countries on the planet, allows gamblers to keep all of their winnings.
The only time a Canadian might have their winnings taxed is if they earn a living from gambling. A professional poker player, for example, is obligated to claim their profits from poker on their tax forms. So long as those profits are high enough to be considered a full-time job, it’s taxable. Of course, that means all losses and relative expenses are eligible as deductions, too.
US Casinos Tax Winnings, Even for Canadians
In the US, all winners are taxed, so long as the amount won is high enough. It doesn’t take much, either. If a lottery tickets pays $600 or more, it’s taxable. If a slot machine delivers a prize of $1,200+, it’s taxable. Even if you win a new car in a casino promotion, the government requires the winner to pay the taxes on the value of the car before they can collect the prize.
As ridiculous as it sounds, that’s how things work in America. The land of the free. The home of the brave. The government of unremitting taxation. You don’t even have to be a US citizen to be subject to taxation of gambling winnings.
For Americans, the rate at which winnings are taxed varies from one state to the next. The federal government automatically shaves 25% off the top. State governments will then collect anywhere from 3% to 5%. If you happen to be visiting a US casino from abroad, however, you’re instantly charged the highest possible combined rate of 30%.
No Biggies, Just Don’t Tell Anyone…
Sure, that sounds like an easy solution. Don’t report the winnings, and you can’t be taxed for them, right? Wrong. The US government is more clever than that. They want those tax dollars, and they’re guaranteed to get them.
Instead of relying on the honesty of people, they take their cut before you even get your hands on it. Let’s say you’re spinning the reels of some slot machine in Atlantic City or Reno, and you strike a $2,000 jackpot.
The celebrations begin as a staff member comes over, confirms the win, then directs you to the cashier to collect your prize. But instead of receiving $2,000, you are given $1,400, along with a brief explanation that the other $600 belongs to the US Internal Revenue Service (IRS).
‘Thank you for playing, fill out this form, and enjoy your 70% of the payout!’
So when the new Resorts World Catskills Casino opens next month in New York, don’t even think about crossing the border to check it out. Save the fuel money. Visit Ontario’s Fallsview Casino or somewhere closer to home that won’t tax gambling winnings. If you get lucky enough to hit a substantial prize, you’ll be thankful you did!