Taxes On Horse Racing Winnings

Horse Racing Taxes Can Be Refunded. Horse Racing Winners Can Win Again!

When Is Horse Racing Tax Deducted?

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 I Avoid IRS Taxes On Horse Racing Winnings?

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 the 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.

How Is Tax On Horse Racing Winnings Calculated?

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 USD above the original bet; and

    * The winning amount is 300 X the original horse racing bet.

Thus, someone betting $40 USD on a 20:1 long shot will end up with $800 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 USD, but since the horse racing winnings satisfy both of the above criteria, the winning gambler will have $225 USD (30% X $750 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.

How Can I Recover The Withheld Horse Racing Taxes?

Canadians are entitled to deduct gambling losses while in the United States from US horse racing winnings. If your US gambling losses are equal to or greater than your US gambling winnings, you are eligible to receive a full IRS tax refund. For example, if you win a $1200 USD horse racing payout, the IRS will deduct $360 USD as 30% withholding tax. You can receive a full $360 USD IRS tax refund if your US gambling losses are $1200 USD or more in the same taxation year. The gambling losses can be from US casinos, American race tracks, state lotteries, etc.

If you have won a $1200 USD horse racing payout and have been taxed $360 USD, but your accumulated same year gambling losses are only $600 USD, then you are eligible to receive a partial US tax refund. In this case, the amount of your gambling losses can be subtracted from the amount of your gambling winnings, netting $600 USD. Your withholding tax bill would amount to the $600 USD of horse racing winnings multiplied by the 30% withholding tax ($600 USD X 30% = $180 USD). You initially were taxed $360 USD, and after claiming your gambling losses, you are eligible for a horse racing tax refund of $180 USD.

For Canadians, your 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.

International gamblers from treaty countries are able to obtain a full US tax refund. There is no need to deduct US gambling losses against gambling winnings in order to receive a tax refund.  Foreign gamblers from non-treaty countries will need to deduct  US gambling losses against their horse racing winnings for a full or partial gambling tax refund.

Horse Racing Winners: How Can US Gambling Refund 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 has advised countless clients and helped them obtain refunds of withheld horse racing taxes. We are knowledgeable in both US and Canadian gaming laws, sparing you from the endless paperwork and headache. If you had 30% withholding tax taken off your horse racing winnings, you could be eligible for an IRS tax refund.

Request a tax application package now and be on your way to successfully recovering your 30% withheld horse racing taxes.