1042-S Scenario: Casino and Foreign Winner’s Gambling Winnings

When a foreign tourist wins money at a U.S. casino, the IRS requires reporting through Form 1042-S. Gambling winnings for non-U.S. residents are usually subject to a flat 30% withholding rate, depending on the game and amount.

---

Withholding Requirement

The casino, acting as the withholding agent, must withhold 30% of the gambling winnings. Since the income is earned in the U.S., it is considered U.S.-source income.

---

Issuing Form 1042-S

The casino provides Form 1042-S to the foreign winner. The form includes:

• Total winnings (Box 2)

• Income code for gambling (Box 1)

• Amount of tax withheld (Box 7)

• Treaty benefits, if applicable, that reduce withholding

---

Recipient’s Use of Form 1042-S

The foreign tourist can use Form 1042-S to:

• Report their gambling winnings on a U.S. tax return

• Claim withholding as a credit and possibly receive a refund if their tax liability is lower than the withheld amount

---

Why Form 1042-S Matters

Form 1042-S proves both the income earned and the federal tax withheld. This ensures accurate reporting for foreign winners and allows them to claim refunds if too much tax was withheld.

For faster, IRS-compliant filing, check out our Form 1042-S Software. It helps casinos and payers file accurately and avoid penalties.