The 501 S(c)ene

The latest view on not-for-profit accounting issues

IRS filing calendar for raffles

When it comes to IRS filing requirements relating to charities holding raffles, there are many steps to remember and they can be difficult to keep straight! Getting stuck trying to meet the filing requirements after the deadlines can result in late fees and a strained relationship with the winner of the raffle.

Before the raffle
Consider completing as much as you can on the Form W-2G.
Consider creating written raffle rules (consult a nonprofit attorney).
Estimate/budget net income to be raised from the raffle to ensure a net profit (include consideration of if the organization will be paying the withholding taxes on behalf of the winner).
At the time of the raffle
Have winner complete Form W-9 (very important to obtain SS#)
Consider having the winner sign the Form W-2G (if it’s not done at this time, it will need to be done later).
Review and document 2 forms of ID of the winner.
Collect withholding taxes from the winner if required.
After the raffle
Electronically deposit withholding taxes (if > $2,500).
By January 31 of the next year
Send Forms W-2G to winners.
File Form 945 with the IRS (to report total amounts withheld from winnings- send in check if < $2,500).
By February 28 of the next year
File Forms W-2G with the IRS. Include Form 1096 to report totals from Forms W-2G.

Colette Kamps, CPA