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Thread: US Tax Treaty

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    Redemption is offline PNW Lurker
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    Default US Tax Treaty

    Does anyone know which nations the US has tax treaties with?It seems to me tha if you have to pay 30% tax on tournament winnings then this is too big an edge to overcome.Opinions please.

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    Dr Bob's Avatar
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    Default US Tax Treaty

    Info athttp://www.irs.gov/pub/irs-pdf/p901.pdf
    "The attraction of gambling (and life itself) is fuelled by our inherent need to find a pattern in the rich tapestry woven by uncertainty" Dr Bob

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    Default US Tax Treaty

    see alsoGambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.Claimants must give you a Form W-8BEN (with a valid U.S. Taxpayer Identification Number (TIN)) to claim treaty benefits on gambling income that is not effectively connected with a U.S. trade or business.
    "The attraction of gambling (and life itself) is fuelled by our inherent need to find a pattern in the rich tapestry woven by uncertainty" Dr Bob

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    Gambling winnings (Income Code 28) In general, nonresident aliens are subject to NRA withholding at 30% on the gross proceeds from gambling won in the United States if that income is not effectively connected with a U.S. trade or business and is not exempted by treaty. However, a recent change in the law provides for an Exclusion of Certain Horse-Racing and Dog-Racing Gambling Winnings from the Income of Nonresident Alien Individuals. The winnings and the tax withheld are reportable on Forms 1042 and 1042-SNo tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States. A Form W-8BEN is not required to obtain the exemption from withholding, but a Form W-8BEN may be required to inform the withholding agent that the person is a foreign person, that is, Form 1099 reporting and backup withholding would not be applicable. When a Form W-8BEN is submitted to the withholding agent solely for the purpose of identifying the payee as a foreign person, a TIN is not required on such Form W-8BEN.Most gambling winnings are subject to reporting on Form 1042-S. However, proceeds from a wager placed in blackjack, baccarat, craps, roulette, or big-6 wheel are not amounts subject to reporting.On their U.S. federal individual income tax returns, nonresident aliens are taxed at graduated rates on net gambling income won in the U.S. that is effectively connected with a U.S. trade or business.Tax TreatiesGambling income of residents (as defined by treaty) of the following foreign countries is not taxable by the United States: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom.Claimants must give you a Form W-8BEN (with a valid U.S. Taxpayer Identification Number (TIN)) to claim treaty benefits on gambling income that is not effectively connected with a U.S. trade or business.Expedited TINRegulations generally provide that a taxpayer identifying number (TIN) must be furnished on a Form W-8BEN or Form 8233 in order for a foreign individual to obtain the benefit of reduced withholding under an income tax treaty. The U.S. Treasury Department and the IRS are aware of certain unusual cases in which an unexpected payment to a nonresident alien individual claiming treaty benefits arises on short notice. In general, a foreign individual receiving such an unexpected payment currently may be unable to obtain a TIN prior to payment. In such a case, unless the foreign individual already has a TIN, the withholding agent would be required to withhold tax at the 30 percent rate, rather than the treaty rate, and the foreign individual would be required to file for a refund in order to obtain the benefits of the income tax treaty. To alleviate this filing burden on foreign individuals, IRS has put in place administrative procedures that will allow certain withholding agents, who also are acceptance agents and who make unexpected payments to foreign individuals, to apply for and obtain an individual taxpayer identification number (ITIN) for such individuals on an expedited basis. See U.S. Taxpayer Identification Number Requirement for when you can accept a Form W–8BEN without a TIN.Refer to Treasury Decision 8977, Treasury Decision 9023, and Treasury Regulation 1.1441-6 for more information.Canadian Tax TreatyGambling winnings of Canadian residents are subject to NRA withholding at 30% on the gross proceeds from gambling won in the United States. However, Article XXII of the Canada - U.S. Income tax treaty entitles residents of Canada who are taxable by the United States on gains from wagering transactions to deduct U.S. source losses from U.S. source wagering transactions. Canadian residents should file Form 1040NR to obtain a refund of U.S. taxes withheld from the gambling winnings, if applicable.
    "The attraction of gambling (and life itself) is fuelled by our inherent need to find a pattern in the rich tapestry woven by uncertainty" Dr Bob

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    Redemption is offline PNW Lurker
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    Default US Tax Treaty

    Thank you very much Dr Bob

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    you're welcome!
    "The attraction of gambling (and life itself) is fuelled by our inherent need to find a pattern in the rich tapestry woven by uncertainty" Dr Bob

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    Octavian30 is offline PNW Grinder
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    Default US Tax Treaty

    Dr Bob, as you seem to know a lot more than I do on this subject do you know the answer to this....If I were to emulate Joe Hacem's feat at the WSOP =- or even just made a bucket load in a prelim event - then the casino would have to withhold 30% because Australia has no tax agreement with the US ... Then suppose I come back to Oz where I am a pro poker player (hypothetical question this!) and the ATO hit me up for tax on my poker winnings - both WSOP and other - can I get the 30% paid to the IRS as a deduction?
    “I've never won a bunch of hands watching the other blokes play”Doyle Brunson

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    sorry Octavian You need a specialist taxation accountant/lawyer to answer your questions. I don't know what happened with Joe's win tax-wise.In the past, a couple of Australians using a gifted Australian lawyer have submitted US tax returns and received back the tax originally withheld in the USYou would be foolish to identify yourself as a professional poker player.Perhaps what we should be doing is lobbying the Australian Government/Taxation office to get Australia added to the 24 designated countries which are exempt. Since gambling winnings by non-professional gamblers are not taxable in Australia, this should only be a logistic problem, not a philosophical one.Perhaps Americans could lobby to get poker added to the exempt games like blackjack and baccarat.In America, try to get paid in chips and then spread them on a baccarat table to lose 1.3% and then cash them in as baccarat winnings.Satellite wins in practice are generally not taxed.In any case, you should get a TIN number (see IRS website)hope that helps a bitDrBob
    "The attraction of gambling (and life itself) is fuelled by our inherent need to find a pattern in the rich tapestry woven by uncertainty" Dr Bob

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    Octavian30 is offline PNW Grinder
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    Default US Tax Treaty

    Given that Mark is going to the WSOP next year - and I may not even be able to afford to go anyway - I doubt it is of immediate concern - but I bet Joe hadn't considered the matter much before winning the WSOP - so at least I am prepared!
    “I've never won a bunch of hands watching the other blokes play”Doyle Brunson

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    mustafa is offline PNW Railbird
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    Default US Tax Treaty

    yeah i recommend anyone heading over to the US to play in tournies to get a TIN (tax ID number), you feel sick just winning 30k and having them keep 10 of it. Not sure how to do it online, but i had to waste a day in LA in some huge Immigration type building with a huge line of Mexicans out the front. However once you get it, you just show it to the tourny director and you get all the cash, so it's well worth it.

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