Canadians and US casino wins: losses cut the 30% tax, and from 2026 only 90% of them count
Concepts
A Canadian who wins $10,000 on a US slot machine has $3,000 withheld. With $6,000 of US gambling losses the same year, $1,800 comes back for a 2025 win and $1,620 for a 2026 win, when only 90% of the losses count.
- $1,620refund, 2026 win
- $1,800refund, 2025 win
- $1,380US tax, 2026 win
How Losses Reduce Withheld Tax
US casinos withhold a fixed portion of winnings from nonresident aliens. A Canadian resident can recover part of this amount by filing the appropriate nonresident return. The treaty allows you to deduct gambling losses against your winnings directly. This deduction lowers the taxable income figure used to calculate your final liability. The table below shows how the refund amount changes based on the year of the win. It compares the full deduction available in earlier years with the limited deduction starting later. You claim these losses on the return without needing to itemize separately. Proper documentation ensures your calculation matches the allowable deduction limits. See details for foreign visitors regarding specific filing steps.
| Year of the win | Losses that count ($) | US tax ($) | Refund of the 30% withheld ($) |
|---|---|---|---|
| 2025 | 6,000 | 1,200 | 1,800 |
| 2026 | 5,400 | 1,380 | 1,620 |
Changes Effective From Future Years
Starting with the upcoming tax year, the rules for deducting losses shift. A US resident can deduct only a capped portion of their gambling losses. This cap applies to Canadian residents claiming the treaty benefit as well. Consequently, the refund from withheld taxes becomes smaller for later wins compared to earlier ones. The table above illustrates this difference. An earlier win allows a larger portion of losses to offset the tax. A later win restricts the offset, leaving more tax owed. This change reflects a broader adjustment in how itemized deductions are calculated for certain income types. It does not change the withholding rate itself, only the calculation of the final liability.
Exempt Games and Records
Winnings from blackjack, baccarat, craps, roulette, and the big-six wheel are not taxed. These games fall outside the standard withholding rules entirely. If withholding occurs on other games, the same deduction rules apply to recover funds. Keep detailed records of all wins and losses. You need proof of losses to claim the deduction on the return. Without records, you cannot substantiate the claim. The IRS requires contemporaneous logs or receipts. This documentation ensures your calculation matches the allowable deduction limits. Check the instructions for the nonresident form for specific documentation standards. If gambling stops being fun, free help is available via the winnings tax calculator.
Questions
Which games are exempt from US withholding?
Blackjack, baccarat, craps, roulette, and big-six wheel winnings are not taxed. Other games may still have taxes deducted at the source.
Why is the refund smaller for later wins?
Starting in the upcoming tax year, only a capped portion of gambling losses can be deducted. This limits the amount of losses that offset your taxable winnings, resulting in a smaller refund.
What form do I file to claim the refund?
You must file the nonresident alien income tax return. This form allows nonresident aliens to claim deductions against US-source income, including gambling winnings, under treaty provisions.
Do I need receipts for my losses?
Yes. You must keep records of losses to substantiate your deduction claim. Without documentation, the IRS may disallow the deduction, leaving the full withheld amount as tax.
Every figure on this page is computed by code from IRS Publication 515 (2026): the 30% withholding on a foreign visitor's gambling winnings and the tax treaties. See the methodology.