When Is Poker Winnings Tax Deducted By The IRS?
The IRS does not usually tax poker table games. Unfortunately, there are many instances when poker tournament winners are taxed. If you entered a poker tournament in the United States and have won more than $5000.00 USD above your original buy-in amount, the IRS will levy tax on poker winnings at the rate of 30%. The poker taxes apply only if the poker winnings occurred through a poker tournament held in the U.S.
If you entered into a poker tournament at an Indian tribal casino in the United States, then all of your poker winnings may be subject to the 30% poker tax (without the need to meet a specified threshold) for US non-residents. For the rest of the article, we will discuss poker taxes in non-Indian tribal casinos, however all the rules are the same except for the threshold that must be met before poker taxes are deducted.
What Lures Gamblers To Poker Tournaments?
When poker players play poker at a table in a US casino, there is no
poker tax. But, strangely enough
poker tournaments in the United States are taxed. So, why would a poker player decide to take part in a
poker tournament in the U.S.? The enticing factors of
poker tournaments usually include the lure of big payouts, and the competition of a tournament setting. The vast majority of the glamorous, large payout
poker tournaments take place in American casinos, such as in Las Vegas. Even though there are
poker taxes on the largest
poker tournament winners, the prospect of winning big keeps gamblers participating in them.
The IRS, Canadian & Overseas Poker Tournament Winners
At non-Indian tribal casinos, Canadians and international poker players who enter into American
poker tournaments and win $5000.00 USD above their buy-in amount are taxed. Luckily, Canadian and US non-resident
poker tournament winners are eligible to have a partial or full refund of their
poker tournament taxes withheld. If you are like most
poker tournament winners and have been taxed on your
poker winnings; you will most likely be eligible to reclaim part or all of your
taxes on poker winnings. The IRS allows gambling losses of any type in the United States to be deducted from your
poker tournament winnings.
How Do You Calculate Poker Tax?
If you participate in a
poker tournament at a non-Indian tribal casino, and have won $5,000.00 USD or more (after deducting your original buy-in wager), the IRS will impose
poker taxes of 30% on your
poker winnings. For simplicity's sake, let's say you won $5,100.00 USD in a U.S.
poker tournament and had a buy-in amount at the beginning of $100.00 USD. If you subtract the original buy-in wager of $100.00 USD from your
poker winnings, you would have just hit the threshold for the IRS to withhold 30%
poker tax on your tournament winnings. Thus, the IRS will withhold $1,500.00 USD ($5,000.00 USD
poker winnings X 30%
poker tax rate = $1,500.00 USD taxes withheld) from your
poker winnings, and you will get to take home $3,500.00 USD.
To avoid having to share 30% of your
poker winnings with the IRS, you can recover the withheld
poker tax if you have any US gambling losses in the same taxation year. These gambling losses can help to offset against the
tax on poker winnings withheld by the Internal Revenue Service. For example, if you have $5,000.00 USD or more in gambling losses from ANY form of gambling activity in the US in the same taxation year, you will be eligible to recover the entire amount of
poker tournament taxes withheld.
What happens if you have only $3,000.00 USD in gambling losses in the same taxation year as your
poker tournament win of $5,000.00 USD? The $3,000.00 USD gambling loss will be subtracted from your poker win of $5,000.00 USD, with the resulting $2,000.00 USD being taxed as gambling income ($5,000.00 USD original
poker winnings - $3,000.00 USD in gambling losses = $2,000.00 USD in taxable poker income). Since the
poker taxes were withheld at the time of the payout, you will be eligible for a partial tax refund, instead of needing to pay the IRS taxes.
How much of a partial tax refund should you anticipate from the IRS? After claiming your gambling losses against your
poker tournament winnings, there is a net tax of $600.00 USD ($2,000.00 USD net
poker winnings X 30%
poker tax). With this extra deduction, you can expect a tax refund from the IRS of $900.00 USD ($1,500.00 USD original withheld
poker taxes - $600.00 USD new IRS tax amount = $900.00 USD in tax savings).
What Documentation Do Poker Tournament Winners Need?
If you have won a
poker tournament in the United States, you will be given an IRS form 1042-S. If you have lost or misplaced this form, you can attain a copy of the form from the casino that issued it. In addition,
poker tournament winners should keep supporting documentation of their various U.S. gambling losses. Old lottery tickets, race stubs, records of slot machine plays are all considered to be supporting evidence.
Poker Tournament Winners: How U.S. Gambling Refund ™ Can Help You
The IRS tax codes are complicated and difficult to understand. US non-residents attempting to reclaim their
taxes on poker winnings face several more obstacles than US residents. US Gambling Refund ™ is an IRS Certifying Acceptance Agent, and can ensure a speedy and stress-free IRS tax refund. We are knowledgeable of both American and Canadian tax legislation, allowing you to focus your energy on other things, like enjoying the
poker tournament winnings. US Gambling Refund ™ serves both Canadian and overseas visitors to the United States. You could be eligible for a refund of your
poker taxes. US Gambling Refund ™ has a no refund no fee guarantee! You have nothing to lose.
If you have won a U.S.
poker tournament or simply want more information, contact us now to see how we can help you get back your 30% withheld
poker winnings!
