Income Tax - Canadian Prize Winners

Doug Atkins · Post by **Doug Atkins** » Tue Nov 23, 2010 3:37 am

Hey, Greg: I live in Canada, and received a cheque for my prize winnings in the mail, with a 30% holdback for income tax. We don't pay any income tax on these winnings in Canada, and it wasn't deducted last year, so why this year? How do we get that back? Has anybody else experienced this? HELP! I'm out over $1,000....

Potter · Post by **Potter** » Tue Nov 23, 2010 5:10 am

I know Fanball has done this previously with the cdm games. I'd consider getting an American co-manager for two reasons: 1) It would undoubtedly increase your bottom line and 2) Would you give you more street cred. Beauty, eh?

Greg Ambrosius · Post by **Greg Ambrosius** » Tue Nov 23, 2010 5:14 am

Doug, I asked accounting about this and they sent me this:

From the IRS 1042 Foreign Withholding website: Taxable types of income:

Form 1042-S - Foreign Person's U.S. Source Income

What types of income are reported on Form 1042-S?

Form 1042-S reports taxable federal income and the corresponding federal tax withholding relating to

the following types of income received by U.S. nonresidents:

* Wage payments made to employees who have claimed tax treaty benefits

* Tax reportable Fellowship/Scholarship income

* Service payments made to independent contractors for work performed in the U.S.

* Royalty payments issued to individuals or entities.

* Non-employee Prize or Award payments

Shoot me an email at [email protected] and I'll get you in touch with the right person if you'd like to ask more questions. This is the first time this has been withheld from Canadian citizens for the NFBC, so it's understandable if this is confusing.