I have a question about Tax Bracket Irs in April 2006
Q.I have a question about Tax Bracket Irs in April 2006 If I win a jackpot say over the $1200.00 "tax-free" limit, am I still subject to paying the IRS taxes as if I were an American Citizen? Is there ANY provisions which allow for non-resident/citizens to not pay the full IRS tax hit? I thought that there was such a provision...somewhere....whereas non-residents/citizens fill out a different tax form....Am I incorrect?? Up here in Canada, we don't have to worry about paying taxes on lottery/gambling winnings as yet..If the prize is 1 million, the payout is 1 million...
A.I'm not a tax expert, but I do know a tiny bit. There's a "double taxation" agreement between the U.S. and Canada. What that means, is lets say you earned (in this case won) $1200.00 in the U.S. And lets say the casino payed 25% of your winnings directly to the I.R.S., which would be $300.00, and they wrote you a check for the rest ($900.00). Now I'm going to quote how it is in the U.S., which I would assume is very similar in Canada. You fill out your tax return, and report this $1,200 winning as income, and you're in the 35% tax bracket. You only pay $120 taxes on that (35% minus 25% or 10%) and not the full 35% ($420) since you paid a 25% tax to the other country's taxing authority. But lets say your tax bracket is 20% and you still paid that 25% tax. You don't pay any extra tax, but you can't take any credit for that extra 5% you paid either. Anyway, that's how most double-taxation agreements work with one's the IRS/US have with other countries.
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