You've gone to Vegas and won,now you are one of the lucky few.You've hit a win of over $1200 on the slots or video poker,your machine freezes and you wait for an attendant.They insert their marker in the machine and take your details including official ID.Off they go and come back with their boss and a wad of cash.You're excited,you can't wait to get your hands on those dollars.
But what you're about to receive is not what you expected,oh no.The casino deducts 30% tax from the winnings.If you had won that amount on the table games you wouldn't be taxed,but the machines are different.But why ? I don't know.I've searched through the IRS website to find a reason but there isn't one.But what I did find was some interesting information that says that there are existing tax treaties between the US and Uk that says that tax for UK citizens is not payable if you have a "TIN".This is the information on the IRS website "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" Well who goes to Vegas pre armed with a "TIN" not many holiday makers that I know that's for sure.
So they deduct the tax then ?
Well, casinos will,it's the law,but with this extra bit of information I am going to give you,you will not have to pay the tax if you are from any of these countries,as stated on the IRS website.
"Gambling 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, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom."
Oh,that's simple I will just show my passport and I won't get taxed then ?
That should be the case,but the casino will still deduct the tax.
But why,I'm from the Uk,theres a tax treaty between our wonderful countries that exempts me,the IRS website says so,and the IRS don't make mistakes do they ?
In general I don't think they make mistakes regarding this,it's the casino that maybe doesn't know.But here's the clincher.Some casinos can issue you with an "ITIN" individual taxpayer identification number if they are an acceptance agent.An acceptance agent is a person who, under a written agreement with the IRS, is authorized to assist alien individuals get ITINs.The casino can apply for this on your behalf and you collect all the winnings.
I don't believe you,I hear you saying.Well take a look at this page on the IRS website scroll down and you will find two examples of the above.
This is a long winded way to go about things but it is easier than doing it when you get home and may think that it's not worth the hassle.Not all casinos can offer this service,or even know this exists,but I am working on this to find out more.
Alternatively,why are gambling winnings taxed in the US in the first place,for anyone from anywhere ? Even its' own citizens.In the UK all gambling winnings are tax free.If you win £20million on the lottery you get all the money in one go,right away tax free.
Come on the IRS and the US Government sort this out,if only to save all the paper work needed for your own residents when they file their tax returns.

I asked the IRS if gambling winnings in America won by UK citizens were exempt from US taxes and this is the official reply.
Under the treaty with the United Kingdom, gambling winnings are exempt. More information concerning U.S. Tax treaties can be found in Pub. 901 (U.S. Tax Treaties). The actually treaties can be found on our Internal Revenue Service website More information concerning nonresident aliens can be found in Pub. 519 (U.S. Tax Guide for Aliens).