Won in the US? Getting the 30% Tax Back

The 30% is a flat US withholding tax on a non-resident’s gross win. The Canada–US tax treaty lets Canadians deduct their US gambling losses from their US gambling winnings, and you get the difference back (for 2026 wins, possibly less; see the 90% rule below) by filing a Form 1040-NR with an ITIN, using free IRS forms you can complete yourself.

This explainer walks through why the casino held the money back, the treaty clause that makes Canadians a special case, the exact forms and lines, and what to keep. It also covers what, if anything, the CRA wants to know. We quote the IRS, the CRA and the treaty text throughout. It is general information, not tax advice.

Why the casino kept 30%

To the IRS, a Canadian visitor is a “nonresident alien”. IRS Publication 515, the withholding rulebook for US payers, says:

“In general, nonresident aliens are subject to chapter 3 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. The tax withheld and winnings are reportable on Forms 1042 and 1042-S.”

Three things follow from that.

• It’s on the gross win. The casino can’t net your losses at the cage. The 30% comes off the jackpot itself.
• Canada isn’t on the exempt list. Publication 515 lists the countries whose residents’ gambling income “is not taxable by the United States”, including the UK, France, Germany and Japan. Canada is not one of them. The Canadian treaty works differently, through losses (see below).
• Some table games are never taxed. “No tax is imposed on nonbusiness gambling income a nonresident alien wins playing blackjack, baccarat, craps, roulette, or big-6 wheel in the United States” (Pub. 515; the same rule is in Pub. 519). Slot jackpots, lotteries, keno, bingo, poker tournaments and sports bets are not on that list.

The form you get: 1042-S

The casino reports the win and the tax on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Per the IRS’s 2026 instructions for the form:

On your 1042-S	What it means
Income code 28	“Use code 28 for gambling winnings. These are proceeds from a game other than blackjack, baccarat, craps, roulette, or big-6 wheel.”
Box 7a	US federal tax the casino actually withheld
Box 10	Total withholding credit (box 7a plus boxes 8 and 9). This is the number the 1040-NR instructions tell you to use
Deadline	The payer must file it and furnish it to you “by March 15 of the following calendar year”

If March comes and you haven’t received one, contact the casino’s cage or tax department. The 1040-NR instructions tell you to attach the 1042-S to the front of your return, so get it before you file.

The treaty clause that helps Canadians

The Canada–US Income Tax Convention was amended by a revised Protocol signed at Washington on March 17, 1995. Article 11 of that Protocol added a new paragraph 3 to Article XXII (Other Income). The full text, from the treaty document the IRS publishes:

“3. Losses incurred by a resident of a Contracting State with respect to wagering transactions the gains on which may be taxed in the other Contracting State shall, for the purpose of taxation in that other State, be deductible to the same extent that such losses would be deductible if they were incurred by a resident of that other State.”

In plain English: when the US taxes a Canadian’s gambling win, it has to let the Canadian deduct gambling losses the way an American could. IRS Topic 419 puts the contrast directly: “Generally, nonresident aliens of the United States who aren’t residents of Canada can’t deduct gambling losses.”

How it works on the return, from the 2025 Form 1040-NR instructions (Schedule NEC, lines 10a–10c, “Gambling—Residents of Canada”):

1. Line 10a: all your US gambling winnings for the year, including lottery and raffle proceeds, but not blackjack, baccarat, craps, roulette or big-6 wheel.
2. Line 10b: your US-source gambling losses. You “can deduct your U.S. source gambling losses to the extent of your U.S. source gambling winnings.”
3. Line 10c: the net, in column (c), which is the 30% column. “If line 10b is more than line 10a, enter -0- on line 10c. A net loss from gambling activities is not deductible.”

Two limits matter. The losses have to be US-source: money lost at a casino in Niagara Falls, Ontario doesn’t count against a win in Las Vegas. And they are capped at your winnings, so for 2025 and earlier wins the best case is a full refund of what was withheld, never more. For 2026 wins, see the 90% rule below.

A worked example (illustration only)

A Canadian resident hits a US$10,000 slot jackpot in 2025 (under the 2025 rules). The casino withholds US$3,000 and issues a 1042-S. Across all their US gambling that year they have records showing US$6,000 in losses.

Step	Amount (US$)
Line 10a: winnings	10,000
Line 10b: US gambling losses	6,000
Line 10c: net gambling income	4,000
Tax at 30%	1,200
Already withheld (1042-S box 10)	3,000
Refund	1,800

With US$10,000 or more in documented US losses that year, line 10c would be zero and the full US$3,000 would be refundable. That applies to 2025 wins; for 2026 wins, see the next section.

The 2025 return was due June 15, 2026, but a late return can still be filed to claim the refund within the IRS refund window (see “Don’t leave it too long” below).

What changed: the 90% loss rule from 2026

Pub. L. 119-21, enacted July 4, 2025, rewrote the US wagering-loss rule in 26 U.S.C. § 165(d). For taxable years beginning after December 31, 2025, the deduction for losses from wagering transactions “shall be equal to 90 percent of the amount of such losses during such taxable year” and is still allowed “only to the extent of the gains.”

Because the treaty gives Canadians losses “to the same extent” a US resident gets them, our reading is that the 90% cap will also apply to Canadians’ 2026 wins. In the example above, that would mean US$5,400 of deductible losses, US$4,600 of net income and US$1,380 of tax, so a US$1,620 refund instead of US$1,800. On the same reading, getting the whole 30% back would need documented US losses of about 111% of the win (US$11,112 against a US$10,000 jackpot). The IRS hasn’t yet published 2026 Form 1040-NR instructions showing how it will handle this, so check them when they come out. The 2025 instructions (for 2025 wins) contain no 90% limit on line 10b.

The steps, in order

1. Collect your paperwork. You’ll need the 1042-S for each win and your win/loss records (see the next section).

2. Get an ITIN, or apply for one with the return. If you don’t have a US Social Security number, you need an Individual Taxpayer Identification Number. The IRS says you need one when you “want to claim a refund … by filing a tax return” and you aren’t eligible for an SSN.

• File Form W-7 together with your Form 1040-NR. The IRS says to include the tax return in your ITIN application package and “Don’t file it separately.”
• The W-7 instructions have a gambling-specific note: if you didn’t get an ITIN through a casino’s gaming official, “you may still file Form 1040-NR at the end of the tax year with a Form W-7, attaching a copy of Form 1042-S displaying the amount of tax withheld.” The 1040-NR “should also display the tax treaty article number and country under which you’re claiming the treaty benefits.” For Canada, that is Article XXII of the Canada–US treaty.
• ID: a passport is “the only stand-alone document”. Send the original or a certified copy from the issuing agency. If you don’t want to post your passport, the IRS lists two options that return it on the spot: designated IRS Taxpayer Assistance Centers (by appointment, 844-545-5640) and Certifying Acceptance Agents, which operate “both domestically and abroad.”
• Where: a W-7 package goes to the ITIN Operation, not the normal 1040-NR address: Internal Revenue Service, ITIN Operation, P.O. Box 149342, Austin, TX 78714-9342.
• Timing: the IRS says to allow 7 weeks, or 9–11 weeks during tax season (January 15 to April 30) or if you applied from overseas.

3. Complete Form 1040-NR with Schedule NEC. IRS Topic 419 says a nonresident alien with US gambling winnings “must use Form 1040-NR … along with Schedule NEC”. Put the win and losses on lines 10a–10c as above. Enter the withholding from box 10 of your 1042-S on line 25g of the 1040-NR, and “attach Form(s) 1042-S to the front of your return.”

4. File by the deadline. If you had no US wages, the 1040-NR is due “by the 15th day of the 6th month after your tax year ends”. The 2025 return was due June 15, 2026. If you already have an ITIN and aren’t sending a W-7, the 2025 instructions (the current edition as of September 2026) give this address for individuals who aren’t enclosing a payment: Department of the Treasury, Internal Revenue Service, Austin, TX 73301-0215, USA. Those instructions note that the address for returns filed after 2026 may be different, so check IRS.gov/Form1040NR for the current address before you post it.

5. Wait. The 1040-NR instructions say: “Allow up to 6 months for these refunds to be issued” when you’re claiming tax withheld on a 1042-S.

Don’t leave it too long. The IRS says you can’t get a refund “if you don’t file the claim within 3 years of filing your original return, or 2 years after paying the tax, whichever is later, unless you meet an exception.” The same IRS page adds two rules that matter for a first-time filer: “If you had income tax withheld … we consider those payments to have been made on the return due date”, and “Your credit or refund is limited to the amount you paid during the 3 years before you filed the claim, plus any extensions.” So the clock effectively starts at the original due date, not whenever you get round to filing. In practice, file within about 3 years of that due date (around June 15, 2029 for a 2025 win).

Records to keep

IRS Topic 419: “To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses.”

In practice, that means:

• Every 1042-S you received.
• The casino’s win/loss statement. If you played on a players’ card, ask the players’ club or cage whether it can provide a statement for the year.
• A dated diary: date, casino and city, game, amount in, amount out. Write it as you go, not afterwards.
• Supporting paper: ATM and marker receipts, losing lottery and keno tickets, sportsbook ticket stubs.
• A copy of everything you mail, plus proof of the mailing date.

Only US-source losses count on line 10b, so keep US trips separate from any play in Canada.

What the CRA says about the same win

The win itself: usually not taxable in Canada. The CRA’s page Amounts that are not reported or taxed (modified September 17, 2026) lists “lottery winnings of any amount, unless the prize can be considered income from employment, a business or property, or a prize for achievement” among amounts you do not have to report. Its technical folio S3-F9-C1 says gambling produces taxable income only when it amounts to “carrying on the business of gambling” (¶1.12), a test the folio shows is hard to meet. Our Canadian gambling tax guide covers that test in detail.

What the money earns is taxable. The same CRA page: “Income earned on any of the above amounts is taxable.” That includes interest on the jackpot once it’s in your account.

The foreign tax credit usually doesn’t help. The CRA says you may be able to claim the foreign tax credit “if you paid foreign income or profit taxes on income you earned outside Canada and reported on your Canadian tax return.” A recreational win isn’t reported, so there is no Canadian tax on it for a credit to offset. The practical way to recover the US tax is the IRS refund. (If your gambling is a business, the answer is different; get professional advice.)

A word on refund agencies

Some companies advertise “casino tax recovery” to Canadians and charge a fee for it. They use the same Form 1040-NR, W-7 and 1042-S described here. The forms and instructions they use are free to download from IRS.gov, and you can file them yourself. If you do hire help, ask for the total fee in writing, how it is calculated, and whether the refund is paid to you or to them. Be cautious about sending an original passport to anyone except the IRS, a Taxpayer Assistance Center or a Certifying Acceptance Agent. For questions, the IRS takes calls from abroad at 267-941-1000 (not toll-free).

Quick reference

Question	Answer	Source
US withholding rate on a Canadian’s slot/lottery win	30% of gross	IRS Pub. 515
Games never taxed for non-residents	Blackjack, baccarat, craps, roulette, big-6 wheel	IRS Pub. 515 / Pub. 519
Form the casino issues	1042-S, income code 28	IRS Form 1042-S instructions (2026)
When you should get it	By March 15 of the following year	IRS Form 1042-S instructions (2026)
Canada’s treaty benefit	Deduct US gambling losses up to US gambling wins (from 2026, likely 90% of losses)	Treaty Art. XXII(3); 1040-NR Sched. NEC lines 10a–10c
Return to file	Form 1040-NR + Schedule NEC	IRS Topic 419
ID number	ITIN via Form W-7, filed with the return	IRS ITIN page; W-7 instructions
Due date (no US wages)	15th day of 6th month after year-end (June 15, 2026 for 2025)	1040-NR instructions (2025)
Refund processing	Allow up to 6 months	1040-NR instructions (2025)
Taxed in Canada?	Not for a recreational player	CRA; Folio S3-F9-C1

If gambling is costing you money

A refund is not a reason to go back. If you’re worried about how much you gamble, these services are free and confidential:

Province / territory	Help line	Hours
Ontario	ConnexOntario: 1-866-531-2600, or text CONNEX to 247247	24/7
Quebec	Jeu : aide et référence: 1-800-461-0140 (Montréal area 514-527-0140)	24/7
British Columbia	Gambling Support BC: 1-888-795-6111	24/7
Alberta	211 Alberta: dial 211 or text INFO to 211 · Addiction Helpline: 1-866-332-2322	24/7
Saskatchewan	Saskatchewan Problem Gambling Helpline: 1-800-306-6789	24 hours
Manitoba	Problem Gambling Helpline: 1-800-463-1554	24/7
New Brunswick	Addiction and mental health helpline: 1-866-355-5550	24/7
Nova Scotia	Mental Health and Addictions Crisis Line: 1-888-429-8167	24/7
Prince Edward Island	PEI Gambling Support Line: 1-855-255-4255	24/7
Newfoundland and Labrador	Gambling Help Line: 811	24 hours
Yukon	CMHA Yukon Reach Out Support Line: 1-844-533-3030	2 to 10 p.m.
Northwest Territories	811 Mental Health and Wellness Support Line: dial 811 and press 1, or 1-844-259-1793	24/7
Nunavut	Kamatsiaqtut Help Line: 1-800-265-3333 (Iqaluit 979-3333)	24/7
Anywhere in Canada, in crisis	Suicide Crisis Helpline: 988	24/7

Every number above is checked against its official source in our help lines guide, which also covers services for families and debt advice.

In Canada, legal online gambling and self-exclusion programs are run province by province. Our province-by-province legal status guides and our offshore sites guide list each province’s legal site and how to self-exclude.

This guide explains the published positions of the IRS, the CRA and the text of the Canada–US tax treaty. It is general information, not tax or legal advice. We don’t link to or recommend any gambling site or refund service. Last reviewed September 30, 2026.