Tax Law: Why Canadians should stick with Canada Casinos

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As tempting as a trip to Las Vegas or Atlantic City may seem for Canadians – especially after a long, cold winter – there’s one very god reason why Canada casinos are the best place to stay and play. Taxes!

In Canada, we aren’t subject to taxes on gambling winnings. In fact, the majority of first world countries consider winnings from gambling to be a windfall; categorized in the same manner as a monetary gift. Players keep every bit of their winnings, with no taxation applied.

The United States doesn’t see it that way. While the US government actually has one of the lowest state and federal tax rates in the world in terms of traditional income sources, taxes on gambling winnings are outrageous. Even if you’re a nonresident, you may be forced to give up nearly a third of your winnings to the nation’s prehensile government.

Taxes on Gambling Winnings from US Casinos

Not all gambling winnings are taxable. It depends on how much you win. A Canadian who walks away a few hundred dollars richer isn’t going to be subject to US tax withholding laws.

If you strike a slot machine or bingo jackpot of $1,200 or more, or get lucky at Keno to the tune of $1,500+, the situation changes drastically. Likewise, if you win a state or national lottery, wagering pool, or pari-mutuel pool (horses, dogs or jai alai) worth $5,000 or more, or at least 300 times the total stake, the US will want its cut.

When such winnings occur on US soil, Canadians can expect to fill out some forms when they visit the cashier. In addition, they’ll only be handed 70% of the overall winnings. The rest is withheld by the gambling facility to cover the mandated taxes on gambling winnings.

Keep Your Receipts! Form 1042-S

During the withholding process, the casino, racetrack or lottery facility will provide the player with Form 1042-S, Foreign Person’s Us Source Income Subject to Withholding.

Make sure to keep any receipts, tickets or other documents that can prove how much money you lost while gambling in the US. If a Canadian is able to prove their losses, that amount can be deducted from any withheld taxes on gambling winnings.

Stick With Canada Casinos

If you’d rather avoid all this hassle, the easiest way to do it is to simply refrain from gambling in the US. Canada casinos offer the same variety of gambling amusements, and never collect taxes on gambling winnings.

If it’s the opulence of Las Vegas you seek, we have some pretty fancy casinos right here. The Fallsview Casino Resort in Niagara Falls, Ontario is quite lovely, as is Quebec’s Casino de Montreal.

It’s also worth noting that Las Vegas – despite being the most famous gambling mecca in the world – has the absolute worst odds on slot machines. The rest of the world regulates that slots must have an RTP (return to player) averaging 87.5% (standard range of 85% to 92%. In Nevada, state regulators allow Las Vegas casinos to set deplorably low RTP’s of just 75%.

If Canada casinos and race tracks didn’t look very appealing to you before, hopefully the US government’s taxes on gambling winnings and lamentable slots payouts in Vegas will change your mind.