Gambling Taxation In Canada - Are Canadian Casino Winnings

We all love to read stories about big wins and imagine ourselves in the shoes of those winners. But, have you ever thought about what happens at that very moment after successfully beating the slot machine? Usually, the slot machine locks up and, in most cases, you hear the music and see the flashing lights on top of the machine. But one of the first questions every player asks is whether they have to pay taxes on casino winnings? Well, you’re about to find out!

Taxes on Slot Machine Winnings in USA

In the USA, when a lucky player hits a jackpot, there’s the option of receiving the winnings in cash or check. In case it’s a large sum, it’s usually paid by check. However, the IRS only obliges the casinos to report winnings that are larger than $1,200.
Of course, all winners are obliged to show a proper identification— a valid ID or passport. When the casino checks for your identification they also look at your age to make sure you are officially and legally old enough to play. As the minimum legal age for gambling varies from state to state, be sure to check it out before you decide to play.

Do I Have to Report All Winnings?

All gambling winnings received from slot machines are subject to federal taxes, and both cash and non-cash winnings (like a car or a vacation) are fully taxable. Apart from slot machines, the same applies to winnings from lottery, bingo, keno, poker or other games of chance. So, if the amount won on a slot machine is higher than $1200, the casino is required to report it. In other words, all your gambling winnings have to be reported on your tax return as "other income" on Schedule 1 (Form 1040), line 8.

Slot Machine Winnings in W-2G Form

In case it happens to you and you snag that big win (which we hope one day you will), it’s useful to know that casino or other payer must give you a W-2G Form, listing your name, address and Social Security number. So, if the winnings are reported through a W-2G Form, federal taxes will be withheld at a rate of 25%.
If, however, you didn’t provide your Social Security number (or your Tax Identification Number), in that case the withholding will be 28%. Either way, a copy of your Form W-2G should be issued, showing the amount you won alongside the amount of tax withheld. One copy needs to go to the IRS, as well.
Aside from slot winnings, Form W-2G is issued to winners of the following types of gambling activities like:

bingo (for players who win $1,200 or more),
keno (for at least $1,500 worth wins)
poker tournament players (for the $5,000 win or more).
a horse track (if the winnings are 300x your bet)

However, not all gambling winnings are subject to IRS Form W2-G. For instance, W2-G forms are not required for winnings from table games like blackjack, baccarat, and roulette, whatever the amount. You’d still have to report your winnings to the IRS, it’s just you won’t need to do it through W-2G Form.

Are My Slot Losses Deductible?

The good news is that you can deduct your slot losses (line 28 of Schedule A, Form 1040), while the bad news is gambling losses are deductible only up to the amount of your wins. In other words, you can use your losses to compensate for your winnings. So, let’s say you won $200 on one bet, but you lost $400 on one or a few others, you can only deduct the first $200 of losses. Meaning if you didn’t win anything for a year, you won’t be able to deduct any of your gambling losses.
In order to prove your losses, you need to keep good records and have suitable documents. So, whenever you lose, keep those losing tickets, cancelled checks and credit slips. Your documentation must include the amount you won or lost, a date and time, type of wager, type of your gambling activity, name of each casino/address of each casino you visited and the location of their gambling business. You may as well list the people who were with you.

Do State and Local Taxes Apply Separately?

Yes, you are required to pay your state or local taxes on your gambling winnings. In case you travel to another state, and snag some huge winning combo there, that other state would want to tax your winnings too. But don’t worry, you won't be taxed twice, as the state where you reside needs to give you a tax credit for the taxes you pay to that other state.
Keep in mind though that some states like Connecticut, Massachusetts, and Ohio don't allow gambling losses.

Online Slot Taxes

Whether you usually spin the reels of your favourite casino games in land-based casinos in the US, overseas casinos, or online casinos, all income for the citizens of the US is taxable. As a US citizen, you are required to send Form W2G for all winnings from a slot machine (not reduced by the wager) that equals to or is more than $1,200.

Taxes on Slot Machine Winnings in UK

As a resident of the United Kingdom, your gambling winnings won’t be taxed. Unlike the USA mentioned above, you’ll be allowed to keep whatever it is that you have won and earned in Britain, even in case you are a poker pro. Then again, you won’t be able to deduct any losses you might collect.
It doesn’t really matter if you win £5 or £5 million playing online slots, your winnings will be tax-free as long as you reside anywhere in the UK, be that in England, Wales, Northern Ireland or Scotland.

Taxes on Slot Machine Winnings in Canada

If you are a recreational player who lives in Canada, we have good news for you. When it comes to gambling, you don't have to pay taxes as your winnings are totally tax free. According to laws in Canada, gambling activities don’t fall under the category of constant source of income, therefore your winnings will not be taxed.
Canadians don't even pay taxes on their lottery winnings. The only exception here are professional gamblers who make a living from betting and are, therefore, obliged to pay taxes. Keep in mind though, this is the current situation - laws in Canada change frequently, which may also include tax laws.

Taxes on Slot Machine Winnings in Australia

In case you reside in Australia and like to visit casinos from time to time, you’ll be happy to find out that your winnings in Australia will not taxed and here are 3 core reasons for that:

Gambling is not treated a profession (it's treated as a hobby)
The government doesn’t see profits from gambling activities as income, but as a result of good luck
The Australian government taxes casino operators and lottery organisers instead.

Of course, taxation varies from state to state.

Taxes on Slot Machine Winnings in New Zealand

Unlike in Australia, where even professional players can claim they are recreational, in New Zealand slot machine winnings (and any other winnings from casino games) are considered taxable income, in case the player has little income from other resources.
But, apart from professional gambling, it is very unusual for winnings to be taxed in New Zealand. Most often, gambling is considered recreational and not income, so players can enjoy their gameplay as they do not have to pay taxes on their winnings.

Depositing gambling winnings in a TFSA?

Here’s my background:
-male, 34 years old living in Canada since 2014 and PR since 2017-18
-born and brought up in Philippines
-while doing my bachelors in my home country, I used to play a lot of online pokeblackjack and won in the neighbourhood of high 5 figures (USD) but wasn’t sure if I could withdraw it there without problems because of gambling being a grey area
-moved to Canada in 2014 to do my masters that I finished in 2015
-also managed to withdraw above money to my Canadian bank accounts in small increments during this period
During my masters, I started playing live at casinos here and really fell in love with the lifestyle and the freedom to visit my home country every year for a few months to look after my ailing mother, to the extent I never bothered finding a 9 to 5 after getting my 3 year work permit (2015-2018).
However, I did work part-time for around 6 months in 2017 and got my PR in 2018. I also worked part time for around 5-6 months in 2019. With salary around $6-8k each in both years.
I also played a lot of poker and blackjack at the casino during all these years during which I made:
2015-$8k
2016-$5k
2017-$35k
2018-$49k
2019-$35k
I started filing my taxes around 2018, and consulted with a few tax professionals, all of whom suggested that the above qualifies as casual gambling income (not conducted as a business), and to report only my part-time job income as per T4 slips. They did mention that it is a very grey area whether the activity is taken for the pursuit of profit or not and hence taxable or not, but the CRA would consider the amounts too small and the topic too controversial to litigate as taxing gambling profits could mean allowing gambling deductions for everyone. And at worst, I could be asked to pay taxes on these winnings in the future. Besides, I live a very basic life (no cahouse) and my only expenses are rent ($1k) and groceries. I also intend to find another job once COVID ends.
Over these years, I’ve never bothered to invest my money (that has been lying in a zero interest savings account) which I’ve realized has been a big mistake since I’ve seen my bank balance stay stagnant or trickle down. However, I still do have the high 5 figures (thanks to the money I won prior to moving to Canada) that I wish to start investing now, using something like Wealthsimple.
I came across something called TFSA and was advised to start with that (since my total contribution room accumulated over the years would be almost $50k) but since that is an account registered with the CRA, I’m not sure if it would be prudent to put a large sum of money into that?
Can the CRA come up to me and ask where I got the 50k from since it doesn’t reflect in my tax returns? I don’t have a problem even if that happened, but just curious if they indeed monitor TFSAs and match it with your income or not.
If so, should I consider investing in non-TFSA related funds?
Thank you for the suggestions in advance.

Dual citizen looking for tax advice on prize winnings (PayPal)

Hey everyone,
Temporary account for obvious reasons. I've got a pretty unique situation that I need some help on.
I am a dual citizen of USA and Canada. I was born in the states and moved when I was 3 years old. I've lived in Canada ever since (currently 23 years old).
I've recently been playing a lot of those trivia apps on my phone (HQ, Beat The Q, QuizBiz) and well, I've won fairly consistently with a few large prizes in the mix. In a few months I've made just over $5,000 CAD (paid out in USD, converted in PayPal to CAD).
Those apps pay out through PayPal, and most of them are located in Hong Kong (non-US). Here's where my tax question comes into play.
As far as I know, prize winnings in Canada aren't taxable. However being a dual citizen, the rules in the states are a bit different. Now to clarify, this isn't gambling... If you've never played any of these apps before, it's essentially 12 questions of trivia, and if you get all 12 right, you split the cash prize with everyone else who also got them right. No cost to play what so ever.
Firstly, would this fall under the 'prizes and awards' category that seems to be un-taxable, having lived in Canada for over 330 days consecutively, or would I owe taxes on these prize winnings to the states being a dual citizen? I have yet to file US taxes and plan to do so starting next year to make sure I'm compliant (only finding out that I need to do this as of recently).
Here's part two of this question. PayPal. After a lot of reading, PayPal only reports earnings to the states if you make both over $20,000 USD and have over 200 transactions per year. If you're under that (which I am, and plan to be), they don't send any info to the states. Recently, PayPal sent me an email looking to collect tax information from me just to have on record for if I cross that mark. There's two options. One of them saying 'I'm not a US citizen and am not eligible for US taxation', and the other being 'I am a US citizen', where I then need to provide my SSN number. All my info in PayPal is Canadian.
Obviously the correct choice is saying 'I am a US citizen', finding my SSN number and putting it in. I'm more so wondering if anyone has clicked the 'I am not a US citizen and am not eligible for US taxation' box instead, and what the process thereafter is. It seems like if you click that box, the notification will go away and they'll leave you alone.
To clarify - I don't want to avoid taxes. If I need to pay them, I will. I'd just rather be seen as a Canadian by PayPal and file them myself when I do my other taxes, instead of PayPal automatically generating them and linking them to my SSN. There's a lot of family and friend transactions in my PayPal as well, transferring around money for buying friends food and stuff that wouldn't be taxable. In the end it's a personal PayPal account, not a business account, and an auto-generated report of 'earnings' doesn't let me specify that this isn't income from a job.
I know that was a lot of questions, but any and all advice is appreciated! I need to select an option in PayPal in the coming days or else they'll start putting limits on my account, and being such a unique scenario, don't really know who to ask. Thanks in advance!
TL;DR - Made a decent amount of money from trivia winnings, still making money from it as well. Dual citizen wondering if I need to pay tax to the states on those winnings, and if PayPal needs to view me as a US citizen or not.

US/Canada optimization for TFSA, RRSP, taxable accounts? How much can be saved? Is it worth the effort?

are canadian gambling winnings taxable video

Contest prizes and winnings from lotteries or gambling are not taxable in Canada, so this type of income does not have to be reported on your Canadian tax return, unless of course you are engaged in the business of gambling. On your Canadian tax return, you cannot claim a credit for any taxes withheld from these non-business income winnings. If you are a Canadian resident and have had 30% tax There is no gambling winnings tax in Canada if you are a recreational gambler. The Canadian Revenue Agency generally keeps its hands off any money earned through gambling. We use the term “generally” because there are exceptions to the rule. Most Canadian gamblers are not expected to pay any income tax on their winnings, since these prizes are not really considered to be a viable source of income. The government simply does not see this kind of taxing as just or fair, as the majority of Canadian players do not make a living this way and gambling is not their career. Are Gambling Winnings Taxable in Canada – What the law says. On the Canadian Revenue Agency (CRA) website, there is a page that lists the types of income that you do not need to declare on your tax return. Included in that list is “most lottery winnings.” That’s because occasional lottery winnings in Canada are considered a windfall Gambling winnings are not taxable in Canada. Whether it’s a casino or a lottery win, the law is very clear. These amounts are not considered taxable income. The only exception to this rule would be for a person playing a casino game with a reasonable expectation of revenue. Any income subject to these conditions in the Canadian Tax Code is subject to taxation as business income. Whether this Taxable Gambling Income. Gambling income is almost always taxable income. This includes cash and the fair market value of any item you win. By law, gambling winners must report all of their winnings on their federal income tax returns. Depending on the amount of your winnings, you may receive one or more Form W-2G, which reports the amount of your winnings and the amount of tax that was Canadian online gamblers can go into their gaming sessions, safe in the knowledge that their winnings are tax-free. The law goes all the way back to British legislation which stated, in principle, that the winnings that come from placing a bet should not be taxed, while the winnings of a bookmaker taking the bet should be taxed. their gambling winnings are taxable.15 Luprypa remains the only case in Canadian jurisprudence where gambling winnings were held to be taxable even though the winnings had no connection to a previously established business or occupation. The rule in Luprypa is limited to gambling games where skill is a significant component. Canadian Gambling Tax - A Summary. Canadian casino players and gamblers don't pay tax on their winnings; However, if you are a full time/professional gambler, you are required to file taxes; If you gamble and win whilst in the USA, you need to declare it; Lottery winnings also aren't taxable. Our Disclaimer. While we are a team of gambling As a rule, the simplest games are the card games and slots. Games like roulette and craps seem complex although they too are simple. Blackjack and baccarat are simple Are Canadian Gambling Winnings Taxable drawing games that even novices can play well in a very short space of time.

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