Winning, then tax issues?

Back to the OP's question. If you are not a US citizen and expect the possibility of hitting a big jackpot on a machine game, you should get yourself an ITIN and familiarize yourself with the tax treaty status between your nation of citizenship and the US. Depending on that relationship, you will be able to get some or all of any tax withheld back by filing a return with the IRS. There are businesses who handle this for you, but of course they charge a fee or take a cut. Depending on your comfort level with tax forms etc., you can probably handle it yourself. But the fee might be nominal, I really have no idea.

I know that if you give your SSN to the casino, they won't withhold anything on the W-2G because they can be sure the IRS will associate the win with your name and SSN, and if you don't report it you will be in trouble. Now, if you are a foreign national and give them an ITIN, I'm not sure how they will treat it with respect to withholding. As a US citizen who plays mostly table games, this is outside my area of experience :).

Now, if you are playing table games, I don't think you will have a problem. Cash out a big win and they will ask for your ID, but they won't withhold any taxes (this applies to US citizens as well). It might be handy to have an ITIN in this situation as well, I'm not sure.

Quote: AcesAndEights

I know that if you give your SSN to the casino, they won't withhold anything on the W-2G because they can be sure the IRS will associate the win with your name and SSN, and if you don't report it you will be in trouble. Now, if you are a foreign national and give them an ITIN, I'm not sure how they will treat it with respect to withholding. As a US citizen who plays mostly table games, this is outside my area of experience :).

From some personal research, I know that due to our tax treaty a British citizen with an ITIN should be subject to no withholdings when the appropriate paperwork is filled in. For Strip casinos this process should take no more than an hour, but familiarity with this (and im guessing all regulations regarding foreign tax) decreases the further you get from the strip.

Quote: AcesAndEights

I know that if you give your SSN to the casino, they won't withhold anything on the W-2G because they can be sure the IRS will associate the win with your name and SSN

That's actually not accurate.

There are certain trigger marks for both the issuance of a W2-G (1200+) and automatic withholding ($5000 or more not including original wager and must be 300x original wager or more)

Easy examples:

Regular table games wins on Blackjack or Craps of any amount = no W2-G

$1 Side Bet paying 1000-1 = No W2-G

$2 Side bet paying 1000-1 = W2-G but no withholding

$5 Side bet paying 1000-1 = W2-G AND 25% automatic withholding

$25 Side bet paying 200-1 = NO W2-G generated

There are exceptions to the rule of the 25% rate that can slide quite a bit if other requirements are not met.

Quote: IRS

Withholding

You must withhold federal income tax from the winnings if the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. Withhold 25% of the proceeds (the winnings minus the wager). This is regular gambling withholding.

If the winner of reportable gambling winnings does not provide a TIN, you must backup withhold at the rate of 28% on any such winnings that are not subject to 25% regular gambling withholding. That is, backup withholding applies if the winnings are at least $600 but not more than $5,000 and are at least 300 times the wager. Figure backup withholding on the amount of the winnings reduced, at the option of the payer, by the amount wagered.

Quote: grbjdealer

That's actually not accurate.

There are certain trigger marks for both the issuance of a W2-G (1200+) and automatic withholding ($5000 or more not including original wager and must be 300x original wager or more)

Easy examples:

Regular table games wins on Blackjack or Craps of any amount = no W2-G

$1 Side Bet paying 1000-1 = No W2-G

$2 Side bet paying 1000-1 = W2-G but no withholding

$5 Side bet paying 1000-1 = W2-G AND 25% automatic withholding

$25 Side bet paying 200-1 = NO W2-G generated

There are exceptions to the rule of the 25% rate that can slide quite a bit if other requirements are not met.

Quote: IRS

Withholding

You must withhold federal income tax from the winnings if the winnings minus the wager exceed $5,000 and the winnings are at least 300 times the wager. Withhold 25% of the proceeds (the winnings minus the wager). This is regular gambling withholding.

If the winner of reportable gambling winnings does not provide a TIN, you must backup withhold at the rate of 28% on any such winnings that are not subject to 25% regular gambling withholding. That is, backup withholding applies if the winnings are at least $600 but not more than $5,000 and are at least 300 times the wager. Figure backup withholding on the amount of the winnings reduced, at the option of the payer, by the amount wagered.

Good catch; I forgot about the W-2G thresholds for table games.

I thought a 1000-1 win on a $1 table games side bet would generate a W-2G? It's over 300-1 and it's over $600. I have never been issued one (generally don't play side bets) but I thought that was how it worked. According to the paragraph quoted above, "backup withholding" would apply if they don't provide a TIN. They can't do backup withholding without a W-2G, right?