Tag Archives: winnings

Unique winter holiday fundraising ideas

The holiday season is a time for joyful events full of cheer that bring together the entire community. Your group or organization can take part in the fun with a variety of exciting fundraising ideas!

Festival of Trees fundraiser

Host a “Festival of Trees” fundraiser with individuals decorating donated trees. Ask local businesses to donate trees and decorations. Raffle off the finished trees to needy families.

Events such as First Night observations can be a great way to get the word out about your organization. These events are family-friendly celebrations of the new year that commonly include live music performances, fireworks at midnight and much more. The higher the participation among community groups, the more fun for everyone – so if a first night event is planned for your area, it’s worth asking about being a presence there with a basket or other type of raffle.

Some communities hold open houses of private homes and public spaces decked out in their holiday best. The sight of a lovingly tended Victorian home adorned with lights and sprigs of fragrant evergreen brings a warm, nostalgic feel to many. If an open house is being held near you, consider taking part by selling tickets at each home. The more tickets guests purchase, the greater their chance of winning a prize after the event ends – just be sure to remind them to retain their ticket stubs!

What is Christmas without a visit from Santa? Your organization could host a breakfast with Santa at a local mall, VFW post or community hall and sell tickets in advance to help give you an idea of how much will be needed in terms of food and other supplies. Ask the management of a grocery store if the store would be able to donate food and supplies for your event. You could even hold a drawing for a classic Christmas ham dinner with all the trimmings, which would help generate positive publicity for the grocer when the store donates the meal.

While the little ones are visiting with Old St. Nick, mom and dad could enter a Santa sack toy raffle. Ask local businesses, especially shopping centers, to make a donation of different types of toys for girls and boys – the more the better, and the better the publicity for everyone involved. The idea is to raffle off a sack full of toys, and pending on the size of the sack and the toys themselves, this could mean over $1,000 in toys!

Another type of fundraiser your group may want to think about is a festival of trees. Your local mall, museum or community center may have space available for a display of donated artificial trees, or tree farmers in your area may be willing to donate fresh trees and wreaths in exchange for publicity. Decorate the trees and hold a silent auction for a lucky family to take home a tree that’s ready for gifts to be placed underneath!

Have fun and enjoy your holidays!

Raffle prizes, winnings and taxes

Don’t overlook the post-raffle details …

Calculating tax on prize winnings

Raffle winnings need to be run through a formula to determine the amount of tax owed

Sometimes it comes as a surprise to raffle organizers that the prize their organization is offering may be subject to federal (and possibly state and local) income taxes. The formula for calculating the amount of tax to pay, if any, may seem complicated, but it’s actually pretty straightforward.

First of all, determine whether your organization needs to report the raffle prize to the IRS. In general, if the amount paid for the prize minus the cost of the wager equals $600 or more, and the payout is at least 300 times the amount of the wager, the prize must be reported.

As an example, let’s say Jimmy bought a $1 ticket for a raffle conducted by an exempt organization called XYZ and won $1,000. Simple math tells us that $1,000 minus $1 equals $999 – which is greater than $600 – and that the $1,000 payout is more than 300 times the cost of the $1 ticket. XYZ will need to file Form W-2G with the IRS and give Jimmy a copy of Form W2-G as well.

Jimmy will need to fill out some paperwork, too – Form 5754. This Statement by Person(s) Receiving Gambling Winnings form states his identity and that of anyone else who is entitled to the winnings, and XYZ must keep the form for four years and have it available for inspection.

(If Jimmy receives the winnings but is not the actual winner – or if he is a member of a group of winners who won with a single ticket – as the recipient he must still furnish XYZ the information listed in Form 5754. XYZ will file Form W2-G based on the information Jimmy provides in Form 5754.)

The deadline for issuing Form W2-G to prize recipients is January 31 of the year after the year of the raffle; the deadline for filing Form W2-G is the last day of February of the year after the year of the raffle. So if Jimmy won his $1,000 prize on May 8, 2012, XYZ must issue Form W2-G by January 31, 2013 and file it by February 28, 2013.

If the winnings from a drawing exceed $5,000, the organization paying out the prize must withhold 25% from the winnings and report that amount on Form W2-G. So let’s say Alice bought a $1 ticket at an XYZ raffle and won a prize of $6,000. Subtracting $1 from $6,000 results in $5,999, and so 25% of $5,999 – $1,499.75 – must be withheld from her winnings.

The kicker? If XYZ fails to withhold that $1,499.75 before distributing the prize, XYZ will be held liable for the withholding tax.

Next time, we’ll look at backup withholding and what to do when the prize isn’t cash or if the organization pays the tax as part of the prize.

Get the word out

Send information about your drawing to local news outlets – TV, newspapers, community calendars, local-info web sites,  chambers of commerce, even posters in store entryways – They’ll often mention your organization or event and sometimes they’ll even send a reporter or local dignitary to your event.

It’s free advertising that will help to draw more interest!