When Is Horse Racing Tax Deducted? How Can I Avoid IRS Taxes On Horse Racing Winnings?
The IRS levies a flat 30%
horse racing tax on US nonresident gamblers who have won over a certain amount and percentage while
horse betting in the US. If you have been assessed tax in the US while
horse gambling, there is no real way of avoiding the withholdings on your
horse racing winnings. However, you may be eligible to reclaim the
horse racing taxes back once you have arrived home to your native country.
How can you avoid the IRS from taking a portion of your
horse racing winnings in the first place? If you were
horse betting physically in the United States and won at horse racing, you would be subject to the 30% withholding tax. However, if you won at horse racing (even at a horse race at an American track) by placing your horse racing bet from a non-US location, you would not be assessed any
horse racing taxes.
Why Engage In Horse Gambling At American Racetracks Despite The Existence Of Horse Racing Tax?
Canadians can watch hockey games on television, yet they often make the trip and pay for the cost of watching hockey games live. Similarly, we can gamble on almost every horse race from a local Canadian racetrack and/or casino. Yet many Canadians and other non-Americans visit and gamble at US racetracks simply because these horse aficionados want to experience certain events live. The Triple Crown of US horse racing, consisting of the Kentucky Derby, the Preakness, and the Belmont, are certainly more interesting to live spectators than watching on a television screen locally.
Calculating The Tax On Horse Racing Winnings
The IRS has strange and complicated rules for horse racing taxation.
Horse racing winners have 30% withholding tax assessed if their horse race winnings and horse racing bet satisfy the following conditions:
- The horse racing wager wins $600.00 USD above the original bet; and
- The winning amount is 300 X the original horse racing bet.
Thus, someone betting $40.00 USD on a 20:1 long shot will end up with $800.00 USD in horse racing winnings, but will not have any horse race tax taken off.
Conversely, someone betting $2.50 USD on a 300:1 long shot will win only $750.00 USD, but since the horse racing winnings satisfy both of the above criteria, the winning gambler will have $225.00 USD (30% x $750.00 USD) deducted as withholding tax.
To complicate the rules even further, some Indian tribal casinos and horse racing tracks in the United States may assess the 30% horse racing tax on all horse racing winnings (without the need to meet a specified threshold or ratio) for US non-residents.
Record Keeping While Horse Betting In The US
Canadians and many other US non-residents are entitled to deduct gambling losses while in the US from US
horse racing winnings. For example, if you win a $1200.00 USD horse racing payout and the IRS has deducted $360.00 USD as 30% withholding tax, but you have ANY gambling loss in the same year, part or all of your withheld
horse racing tax can be refunded. Thus, if the IRS has taken $360.00 USD from your
horse racing winnings, and you have lost $1200.00 USD or more from any combination of gambling losses from US casinos, American race tracks, state lotteries, etc., you are entitled to receive a tax refund for the entire amount withheld on your horse race winnings.
Your US gambling losses can be used to offset against the withheld taxes on horse racing wins while in the United States. Thus, as a savvy gambler, you should document all of your US based gambling activities. You should note the dates and locations of your gambling, what games you have played, and the amounts you have won and lost. Please read through the rest of our website for further information on how to deduct gambling losses to reclaim
horse racing taxes.
Horse Racing Winners: How U.S. Gambling Refund ™ Can Help You
Dealing with the IRS can be a difficult process when trying to claim back the taxes withheld on
horse gambling in the United States. US Gambling Refund ™ is an IRS Certifying Acceptance Agent, and we can ensure the largest, most comprehensive tax refund for you on your withheld
horse racing taxes. We are knowledgeable in both US and Canadian tax laws, sparing you from endless paperwork and headache. US Gambling Refund ™ is headquartered in Vancouver, BC, and serves Canadians and international visitors to the United States. If you have had 30% withholding tax taken off your
horse racing winnings, you could be eligible for a refund. We have a no refund no fee guarantee, so if you do not get a tax refund from the IRS, then we do not charge a fee!
Contact us now to see how we can help you get back your 30% withheld
horse racing winnings!
