Phil Hogan is a Canadian and US CPA working with clients throughout Canada and the US. Phil advises on cross border tax and financial planning matters. Phil can be reached at phil@beaconhillwm.ca or via telephone at 778.433.1314. You can also read more about Phil at www.Beaconhillwm.ca/team/about-phil/
Gambling Refund Disallowed by the IRS
11 January 11 
Cross Border Tax Q&A Question
Phil,
I know you don’t know me from a hole in the ground and I know you are out to make money but I thought I’d ask anyhow. I’m a XXXXXX in XXXXX but US Tax law isn’t my forte. I have had an ITN for more than 10 years and have filed a 1040NR to recover gambling money each year. Last year I was told I wasn’t getting it back because I didin’t claim my losses. I had never done it in the past and didn’t know what they were talking about. Of course you have to wait 12 weeks to find that out.
They essentially told me I should never have been paid previously without including that info. I finally resolved it but am getting ready to file again and I want to make sure I have things right. The 40 pages of instructions for the 1040NR have always been a bit of a joke. Just wondering if you can tell me if there is anything else that might hold up my return other than now filling out lines 10a and 10b? Is it as simple as you withheld $1200 from me on a $4000 win so I better claim losses of at least $5200?
Thanks in advance should you decide to humour me!
XXXXXXXXX
Answer
Hi XXXXX
I’m not sure if I understand you question, however I’ll give it a shot….
An example:
- You win $10,000, they withhold $3,000
- You also have $5000 of losses
What should happen is that you report the $10,000 of winning less the $5,000 of losses for net income of $5,000. You’re taxed at 30% = $1,500. Since they withheld $5000 you should receive a refund of $3,500.
It’s possible that they are disallowing you losses because you failed to provide proof of you losses. I wasn’t aware that they required proof of losses unless they specifically asked for proof. Did they send you a letter requesting proof of losses after the return was filed?
I’m not sure if this is what happened. Did they provide any explanation on the letter they sent?
Feel free to give me a call at 250-661-9417.
Cheers
Phil
Phil Hogan, CA
250-661-9417
This commentary reflects the personal opinions, viewpoints and analyses of the Beacon Hill Wealth Management Ltd. partner providing such comments, and should not be regarded as a description of advisory services provided by Beacon Hill Wealth Management Ltd. or performance returns of any Beacon Hill Wealth Management Ltd. client. The views reflected in the commentary are subject to change at any time without notice. Nothing in this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Beacon Hill Wealth Management Ltd. manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. Any discussion about taxation is for educational purposes only and should not be viewed as professional advice. Consult your tax professional for tax advice on your particular situation.
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