Form 1042-S for Gambling Winnings: How Canadians Get Their U.S. Casino Tax Back (2026)

You won at a U.S. casino, and before you saw a dollar, 30% went to the IRS. A few months later, a Form 1042-S arrived, full of codes and boxes. If you live in Canada, that tax often isn't final.

The Canada-U.S. tax treaty lets Canadians deduct their U.S. gambling losses from the same year and claim back some or all of the withholding. This guide explains what the 1042-S means for gambling winnings, how to read it box by box, how the refund works and what changed for 2026.

It's written for Canadians who won on slots, keno, bingo, poker tournaments, sports bets or horse racing in the United States.

What is Form 1042-S for gambling winnings?

Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, is the slip a U.S. casino, racetrack or sportsbook issues to a non-U.S. person when it withholds tax on winnings. For gambling, it shows income code 28, the amount you won and the tax taken.

Think of it as the nonresident version of the W-2G. Americans get a W-2G. Canadians and other nonresidents generally get a 1042-S instead, because their winnings fall under a different withholding regime (IRS Chief Counsel Advice 202547016).

The casino must send it by March 15 of the year after your win, or the next business day if that date falls on a weekend (IRS Instructions for Form 1042-S). For 2026 winnings, that's March 15, 2027.

Your 1042-S matters because it proves the IRS received the tax. Keep Copy B for your records and attach Copy C to your U.S. return. Without it, or a replacement from the casino, the IRS has nothing to credit your refund against.

If a casino gave you a W-2G instead, it may have treated you as a U.S. person. Contact its compliance department to have the slip corrected, since a mismatch can delay your claim.

Why U.S. casinos withhold 30% from Canadians

The United States taxes gambling winnings a nonresident earns there at a flat 30% of the gross amount, and the payer must withhold it on the spot. Americans can net their losses on their tax return. Canadians can too, but only afterwards, by filing a U.S. return. So the casino takes 30% of the full payout first (IRS Chief Counsel Advice 202547016). Read more about why the casino took 30%.

When you get a 1042-S, and when you don't

The five table games are tax-free for nonresidents, so they're never reported on a 1042-S (IRS Instructions for Form 1042-S). The flip side: losses on those games can't be used to reduce your taxable winnings.

In practice, casinos usually withhold when a win stops the machine for a hand pay and requires paperwork. For U.S. players, that paperwork threshold on slots was US$1,200 through 2025 and rose to US$2,000 for 2026 (RSM). Smaller wins often pass without withholding, and if no tax was taken, there's nothing to get back.

How to read a gambling 1042-S, box by box

Only a handful of boxes matter for gambling winnings. The rest are usually blank or filled with codes that don't affect your refund. Box names below are as printed on the form.

Source: IRS Form 1042-S box labels and instructions.

Example: a US$10,000 slot jackpot

You hit a US$10,000 jackpot in Las Vegas. The casino pays you US$7,000 and sends the other US$3,000 to the IRS. Your 1042-S shows 28 in box 1, 10000 in box 2, 30.00 in box 3b, 3000 in boxes 7a and 10, and CA in box 13b.

You may get one 1042-S covering all your withheld wins at that casino for the year, or one per win. Either is normal. Keep every slip.

How Canadians get their casino tax back

Canadians recover 1042-S withholding by filing a U.S. nonresident return, Form 1040-NR, and deducting their same-year U.S. gambling losses. There's no separate refund form. For the full process, see our complete guide to U.S. gambling tax recovery.

The treaty rule: Article XXII(3)

Most nonresidents can't deduct gambling losses at all. Canadians can, because of Article XXII(3) of the Canada-U.S. tax treaty. It says wagering losses of a resident of one country are deductible in the other "to the same extent that such losses would be deductible if they were incurred by a resident of that other State" (Canada-U.S. Tax Convention).

In other words, you get the same loss deduction an American would. The IRS builds this into the return: Schedule NEC of the 1040-NR has a line for gambling reserved for residents of Canada, where you enter winnings, losses and the net (Schedule NEC). Residents of most other countries must enter winnings only.

The net is still taxed at 30%. Your refund is the difference between what was withheld and 30% of your net winnings. So the size of your refund depends on how much you lost, and how well you can prove it.

Example (2025 rules): US$10,000 jackpot, US$3,000 withheld, US$7,000 of documented losses that year. Net winnings are US$3,000, so the correct tax is US$900. The refund is about US$2,100.

The ITIN requirement

You can't file a 1040-NR without a U.S. taxpayer number. Most Canadian gamblers don't have one, so they apply for an Individual Taxpayer Identification Number (ITIN) on Form W-7, sent together with the return.

The W-7 needs proof of identity, usually your passport. Sent directly to the IRS, that means mailing your original passport or a copy certified by the issuing agency. A Certifying Acceptance Agent (CAA) can verify your passport in Canada instead, so it never leaves your hands. Learn more about applying for an ITIN from Canada.

Step by step

1. Gather every 1042-S for the year and your records of U.S. gambling losses.
2. Complete Form W-7 and have your identity documents verified.
3. Prepare Form 1040-NR. Report winnings and losses on the Schedule NEC line for residents of Canada, and claim the box 10 amount from each 1042-S as tax withheld. Attach Copy C of each slip.
4. Mail the return with the W-7. Returns with an ITIN application are filed on paper, not electronically.
5. Wait for the ITIN, then the refund. The IRS assigns the ITIN first, then processes the return.

If you won in several years, each year needs its own 1040-NR. One ITIN covers them all.

The 90% gambling loss rule from 2026: does it affect Canadians?

Probably yes, for winnings from 2026 onward. Winnings from 2025 and earlier years aren't affected.

The One Big Beautiful Bill Act changed Sec. 165(d) of the U.S. tax code. For tax years starting after December 31, 2025, gambling losses are deductible only up to 90% of their amount, and still never more than your winnings (KPMG). The other 10% is simply lost, with no carryforward.

The treaty gives Canadians the same loss deduction a U.S. resident gets. Since a U.S. resident is now limited to 90%, the plain reading is that Canadians are too. As of November 7, 2026, the IRS hasn't published guidance aimed specifically at Canadians, so treat this as the expected position rather than a settled one.

What it does to your refund

Same US$10,000 jackpot and US$3,000 withheld, with three levels of documented losses:

The rule bites hardest when your losses are close to your winnings. If your losses exceed your winnings by about 11% or more, 90% of them still covers the whole win, and the refund is unchanged.

Could it be repealed?

Possibly. On September 16, 2026, the House Ways and Means Committee voted 38-5 to advance a bill (H.R. 10357) that would restore the full deduction, retroactive to January 1, 2026 (Covers). It still needs to pass the full House and the Senate. We'll update this guide if it becomes law.

Either way, the practical advice doesn't change: document every loss. Good records are what turn a 1042-S into a refund.

Records that prove your gambling losses

Your refund is only as strong as your records. The IRS can ask you to back up every dollar of losses you claim, so gather as much of this as you can:

• Win/loss statements from each casino's players club. Most U.S. casinos provide a yearly statement on request, even years later.
• Every 1042-S and W-2G you received.
• A gambling log or diary: date, casino, game, amount bought in and amount cashed out for each session.
• Losing tickets for sports bets, horse races, keno and lottery.
• Bank, credit card and ATM statements showing withdrawals at or near the casino.
• Travel records such as hotel folios and flight receipts, which show you were there.

Three limits apply to which losses count:

1. Same calendar year only. 2024 losses can't offset 2025 winnings.
2. U.S. losses only. The treaty covers losses on wagers whose gains the U.S. can tax. Losses at Canadian casinos or on Canadian online sites don't count.
3. No exempt table games. Losses on blackjack, baccarat, craps, roulette and big-6 wheel can't offset a slot or poker win, because winnings on those games aren't taxed in the first place.

No players card? It's not necessarily over. Bank records, a log and travel documents can still support a claim, though the strongest files combine several sources.

Deadlines, how far back you can claim and how long it takes

You generally have three years from the 1040-NR due date to claim a refund. For Canadians with no U.S. wages, that due date is June 15 of the year after the win, and the law treats the 1042-S withholding as paid on that same date (26 U.S.C. 6513(b)(3)).

The rule of thumb: count three years from June 15 of the year after the win. Filing before that date avoids any doubt about weekend adjustments. Missing it means the refund is gone for good, so don't leave old years for last. See refund deadlines by year.

How long the process takes

• ITIN: about 7 weeks, or 9 to 11 weeks between January 15 and April 30, plus mail time.
• Refund: the IRS processes the return once the ITIN is assigned. Plan on 6 to 12 months from mailing for the whole process, sometimes longer when the IRS has backlogs.

How the refund is paid

The U.S. Treasury is moving refunds to direct deposit, which only works with a U.S. bank account. If you file without one, the IRS may send Notice CP53E. You then have 30 days to add an account or request an exception, and if you don't respond, the IRS issues a paper check after 6 weeks (IRS: Understanding your CP53E notice). The check is mailed to the address on your return, in U.S. dollars.

Common mistakes that cost Canadians their refund

1. Assuming the 30% is gone for good. It often isn't. The 1040-NR exists precisely to settle the real tax and refund the rest.
2. Waiting too long. The three-year window closes quietly. Each year you wait, an old year of withholding expires.
3. Throwing away the 1042-S. If it's lost, ask the casino's compliance or tax department for a copy. Note the casino and approximate dates of your wins before you call.
4. Claiming the wrong losses. Losses from other years, Canadian casinos or exempt table games don't count.
5. Having no records. Request players club statements early, since some casinos take weeks to respond.
6. Names that don't match. Your name on the 1042-S, passport and W-7 should line up. A casino that misspelled your name may need to issue a corrected slip.
7. Mailing your original passport. It's not required if a Certifying Acceptance Agent verifies it in Canada.
8. Claiming it on your Canadian return. The CRA doesn't credit or refund this tax. Only the IRS can.
9. Ignoring IRS mail. A CP53E notice or a request for more information has a deadline. Missing it delays the refund.

Are U.S. gambling winnings taxable in Canada?

No, not for casual gamblers. Canada doesn't tax gambling or lottery winnings unless you're in the business of gambling (TaxTips.ca). You don't report your U.S. winnings on your Canadian return.

That also means there's no Canadian foreign tax credit for the U.S. tax withheld. The CRA has nothing to offset it against. The U.S. 1040-NR is the only way to get that money back.

Professional gamblers are the exception. If gambling is your business, your winnings are taxable in Canada and the analysis is different. Get advice specific to your situation.

Get help with your 1042-S refund

You can file the 1040-NR and W-7 yourself. Many Canadians prefer not to, because one missing document or mismatched name can add months.

Casino Tax Refunds is a Montreal-based firm that handles U.S. gambling tax recovery for Canadians, in English and French. We're an IRS Certifying Acceptance Agent, so we verify your passport here in Canada and you never mail it to the IRS. We prepare the ITIN application and 1040-NR, request missing 1042-S slips from casinos and follow the file until the refund arrives.

Our fee is flat, never a percentage of your refund. Every refund depends on your winnings, your losses and your records, so we'll tell you honestly whether a claim is worth filing.

Estimate your refund in a few questions, or get in touch at hello@casinotaxrefund.ca or 1-866-484-6226. You can also see how it works.