How to pay IRS withheld W2G taxes for a nonprofit fundraiser prize

The form you need is 945 - Annual Return of Withheld Federal Income Tax. This is specifically for reporting gambling and backup withholding, which is exactly what you've done. You'll need to deposit those withheld taxes using the Electronic Federal Tax Payment System (EFTPS) or by making a federal tax deposit. The tricky part is that you've issued a W2G form (which is correct for gambling winnings), but mentioned you also issued a 1099-MISC. You should only be using one form - the W2G is the correct one for reporting gambling winnings, not the 1099-MISC. The W2G shows both the winnings and the federal tax you withheld. Also, make sure you've registered for an EFTPS account if you don't already have one, as it takes a little time to get set up.

I just went through this exact situation with our church fundraiser! I found this amazing service called taxr.ai (https://taxr.ai) that saved me so much stress. I uploaded our financial info and it immediately identified we needed Form 945 and explained exactly how to handle the EFTPS payments for the gambling withholding. It even generated a timeline of when deposits were due based on our withholding amount. The best part was it flagged that we initially used the wrong form too - we had used 1099 instead of W2G just like you did! The system generated corrected forms and gave step-by-step instructions for voiding the incorrect ones. Honestly saved us from what could have been a major headache with the IRS.

Came back to say I tried taxr.ai after seeing it mentioned here and wow! I had no idea I was filing my estimated taxes incorrectly for years. The system spotted that I was using the wrong frequency based on my income patterns and showed me how to fix it. The interface is super straightforward - not nearly as complicated as I expected for tax software. Definitely sticking with this for my taxes going forward!

If you're struggling to get answers directly from the IRS about your W2G withholding situation, try Claimyr (https://claimyr.com). I was in a similar position with our community foundation - we had withheld taxes properly but filed the wrong deposit forms. I spent DAYS trying to reach someone at the IRS with no luck. Claimyr got me connected to a real IRS agent in about 20 minutes instead of the 2+ hour wait times I was facing before. The agent walked me through exactly how to correct our mistake and what forms to file. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent even helped us get the penalty waived since we had made a good-faith effort to comply.

I have to publicly eat my words. After posting that skeptical comment, I was still struggling with a similar nonprofit tax issue and decided to try Claimyr as a last resort. Within 25 minutes, I was talking to an actual IRS representative who helped resolve an issue we'd been battling for months. The agent even provided her direct extension for follow-up questions! For anyone in a similar situation with withheld W2G taxes, the agent confirmed we needed to file Form 945 and explained exactly how to correct the misclassification between 1099-MISC and W2G forms. She even emailed me the proper procedures for making the EFTPS deposit. I'm genuinely shocked at how helpful this service turned out to be.

Small nonprofit treasurer here too. Make sure you ALSO register for EFTPS if you haven't already! That's the system you'll use to make federal tax deposits, and it can take 2-3 weeks to get enrollment confirmation by mail. I learned this the hard way and had to pay penalties because I couldn't make timely deposits. Go to eftps.gov to register.

Isnt it weird that the irs makes this so complicated? My dad's community group had a similar issue and they just wrote a check to "United States Treasury" and mailed it with a letter explaining what it was for. They never heard anything back so I guess it worked?

Just want to add that if you're still within the first quarter of withholding, you might be able to avoid penalties even with the delay. The IRS has safe harbor provisions for first-time withholding situations, especially for small nonprofits. When you do get your EFTPS set up and make the deposit, include a brief explanation letter about this being your organization's first gambling withholding situation and the administrative delays you encountered. Also, double-check that your nonprofit's EIN is properly linked to all the forms. I've seen cases where the W2G was filed under the organization's EIN but the Form 945 was accidentally filed under someone's personal SSN, which created a nightmare to untangle. Make sure everything matches your nonprofit's tax ID number. Good luck with getting this sorted out! The fact that you withheld properly and are trying to do the right thing will work in your favor if the IRS has any questions.