Taxes On Poker Tournament Winnings

Have You Won A Poker Tournament? Recover Your Tax On Poker Winnings!

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 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 page, 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 US Non-Resident Gamblers to Poker Tournaments In the United States?

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 after a certain winnings threshold is met. 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 Las Vegas. Even though there are poker taxes on the largest poker tournament winners, the prospect of winning big keeps gamblers participating in them.

Can I Recover The Withheld Poker Tax On Poker Tournament Winnings?

At non-Indian tribal casinos, Canadians and international poker players who enter into American poker tournaments and win $5000 USD above their buy-in amount are taxed at a rate of 30%. Luckily, Canadians are eligible for a full or partial tax refund of their poker tournament taxes withheld. The IRS allows gambling losses from taxable games in the United States to be deducted from your poker tournaments winnings, thereby decreasing the cost of your tax bill. Same-year US gambling losses equal to or greater than your gross poker winnings means you are eligible to apply for a full US tax refund. Same-year US gambling losses that are less than your gross poker tournament winnings means you are eligible to receive a partial IRS tax refund.

International poker winners from treaty countries can apply for a full tax refund. There is no need to claim US gambling losses against your taxed poker winnings. Foreign poker winners from non-treaty countries need to claim gambling losses against their gross poker winnings to obtain a full or partial gambling tax refund.

How Do You Calculate Poker Taxes?

If you participate in a poker tournament at a non-Indian tribal casino, and have won $5000 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 $5100 USD in a U.S. poker tournament and had a buy-in amount at the beginning of $100 USD. If you subtract the original buy-in wager of $100 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 $1500 USD ($5000 USD poker winnings X 30% poker tax rate) from your poker winnings, and you will get to take home $3500 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 $5000 USD or more in gambling losses from any taxable 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 $3000 USD in gambling losses in the same taxation year as your poker tournament win of $5000 USD? The $3000 USD gambling loss will be subtracted from your poker win of $5000 USD, with the resulting $2000 USD being taxed as gambling income. Since the poker taxes were withheld at the time of the payout, you will be eligible for a partial tax refund.

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 USD ($2000 USD net poker winnings X 30% poker tax rate). With this extra deduction, you can expect a tax refund from the IRS of $900 USD ($1500 USD original withheld poker taxes subtract $600 USD new IRS tax amount).

What Documentation Do Poker Tournament Winners Need?

If you won at a poker tournament in the United States, you were given an IRS Form 1042-S. If you have lost or misplaced this form, you can attain a replacement copy from the casino that issued it. In addition, Canadian and international poker tournament winners from non-treaty countries should keep supporting documentation of their various US gambling losses. Old lottery tickets, race stubs, records of slot machine plays are all considered to be supporting evidence.

How Can US Gambling Refund Help Poker Tournament Winners?

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 knowledgeable of both American and Canadian tax legislation. We have simplified the process of claiming your withheld poker winnings. If you are ready to obtain a poker tax refund, click the link below to get started. Our tax application package is simple and straight-forward. Easily recover your IRS withheld poker taxes with our tax service.