If so, how does that work? Do the casinos just withhold a fixed amount and hand it over to the IRS?
While I’m at it, are casinos obligated to report winnings to the home states of out of state gamers, or do they just report to the IRS?
In my experience, a winning or cashing out of less than about $1000 doesn’t get reported (and thus doesn’t generate a 1099-MISC for gambling winnings.) For instance, I had to fill out some paperwork when I hit a royal flush playing video poker and cashed out right then ($1000 for the win plus the money already in the machine) but I’ve cashed out for several hundred dollars otherwise (including some wins playing slot machines that I again had to have paid by the attendant) without filling out that same form.
So, as far as I know, I’ve only had one win actually reported to the IRS (at least, that’s the only time I’ve gotten a 1099-MISC.) However, I make sure to track my gains and losses and report them accordingly at tax time.
According to this site (a commercial site that helps non-US residents get tax paid to the IRS through gambling winnings back):
It seems that yes, non-residents of the US can get some of the withheld tax back. However, since this is a commercial site and is in business to do just this, I’m unsure if it is as easy as they make it sound.
I do know that I can bet on American horse races up here in Canada, and not pay any tax on my winnings (Canadian gambling wins, unlike those in the US, are generally not taxed). The reason is that Canadian parimutuel pools on American races are kept in Canada, separate from the American pools on the same races. The tax problem (American pay tax on their winnings, Canadians don’t) is thus avoided when playing US horse races in Canada.