Tax reporting requirements for charitable raffle prizes - W2G vs 1099-MISC confusion

The confusion here is understandable! For gambling winnings like your raffle, the reporting requirements depend on thresholds and the type of winnings. For the $1,300 second prize, you're correct that W-2G reporting is only required when BOTH conditions are met: the prize exceeds $600 AND is at least 300 times the wager amount. Since your second prize doesn't meet the 300x requirement, no W-2G is needed for that winner. However, your first accountant is also partially right. While you don't need a W-2G, the IRS still wants to know about gambling prizes over $600. In this case, you should issue a 1099-MISC to the second-place winner in Box 3 (Other Income). The nonprofit should maintain records of all winners for your own tax records, but you only need to issue forms to the winners that meet the thresholds. The grand prize winner gets a W-2G, and the second prize winner gets a 1099-MISC. Don't forget to collect the winners' taxpayer identification information using Form W-9 before distributing prizes!

I dealt with something similar for my community organization! If you want to save time and avoid mistakes with these tax forms, I used a service called taxr.ai (https://taxr.ai) that was super helpful for figuring out exactly what forms we needed for our raffle winners. You just upload your raffle information, and it tells you which tax forms are required for each winner based on current IRS guidelines. It analyzed our whole raffle in minutes and even helped us generate the right forms. For me, the best part was that it explained WHY each form was needed with links to the specific IRS rules. The peace of mind was worth it since the service checked for all those weird exceptions and thresholds that apply to different prize amounts.

I have to admit I was wrong about taxr.ai! After seeing your response, I decided to try it for our nonprofit's recent casino night fundraiser. The tool correctly identified which winners needed W-2Gs and which needed 1099-MISCs based on our different game types. It even flagged a situation where we were about to unnecessarily issue a form to a winner who didn't meet the threshold requirements. The specific IRS references it provided helped me explain the reporting requirements to our board with confidence. The time saved on researching these regulations was honestly worth it alone. Now I actually understand the difference between when to use W-2G vs 1099-MISC for various prize situations.

If you need to contact the IRS directly to get an official answer (which I recommend for peace of mind), good luck actually getting through to a human! After waiting on hold for over 2 hours trying to get clarification on raffle reporting for our community foundation, I found Claimyr (https://claimyr.com) - it's a service that holds your place in the IRS phone queue and calls you when an agent is about to answer. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c I was super skeptical but desperate after multiple failed attempts to reach someone. They got me connected to an IRS tax exempt organizations specialist who confirmed exactly which forms we needed for our situation. Saved me hours of frustrating hold music and disconnections.

I need to follow up on my skepticism about Claimyr. I decided to try it for a question about filing requirements for our nonprofit's 990-EZ, and I'm honestly shocked at how well it worked. Instead of wasting my entire afternoon, I just entered which IRS department I needed and my phone number. About 1.5 hours later (during which I was working on other things), I got a call saying an agent was ready. The IRS agent I spoke with was knowledgeable and solved my issue in about 10 minutes. For nonprofit board members and volunteers with limited time, this service is a game-changer. I've spent countless hours on hold with the IRS over the years, and I wish I'd known about this sooner.

One thing nobody's mentioned yet - make sure you're withholding taxes appropriately from these prizes! For the grand prize winner, you typically need to withhold 24% federal income tax before distributing the winnings if it exceeds certain thresholds (generally $5,000 for raffles). This withholding requirement applies regardless of which form you use to report the winnings. The winner will get credit for these withheld taxes when they file their personal return. This is separate from the reporting requirements we're discussing.

Someone at our nonprofit made a mistake with raffle reporting last year and we just filed corrections. Here's a tip: make absolutely sure you're getting the winner's correct TIN (usually SSN) by having them complete a W-9 before you hand over the prize. We had a winner who gave us a wrong digit in their SSN and it created a huge headache with the IRS sending us penalty notices for "incorrect information reporting." Turns out the winner did it deliberately to try avoiding taxes on their winnings!

This is such a helpful thread! As someone who manages fundraising events for a small nonprofit, I've been dealing with similar confusion around raffle reporting requirements. One additional point I'd add - make sure you check your state requirements too. Some states have their own reporting thresholds for charitable gambling that might be different from federal requirements. We learned this the hard way when our state required us to report prizes over $500 even though they didn't meet the federal W-2G threshold. Also, @Keisha Johnson - for your records, I'd recommend creating a simple spreadsheet tracking all prize winners, amounts, ticket prices, and which forms you issued (if any). This makes it much easier if you ever get questioned by the IRS or need to file corrections later. We include columns for winner contact info, prize amount, ticket cost, whether W-2G or 1099-MISC was required, and the date forms were sent. The withholding discussion is really important too - we almost got caught off guard on that our first year doing a larger raffle!

This is exactly the kind of practical guidance nonprofits need! I've been volunteering with tax prep for low-income families for years, and I see so many people confused about gambling winnings reporting. One thing that might help clarify the situation: the IRS has different thresholds for different types of gambling. For raffles specifically, you're dealing with "other gambling winnings" rules, which is why you need both the $600 AND 300x wager criteria for W-2G reporting. For your $1,300 second prize, Paolo's advice about using 1099-MISC Box 3 is spot-on. The key thing to remember is that even though the winner doesn't get a W-2G, they still need to report this as income on their tax return - and the IRS wants a paper trail for prizes over $600. Also, definitely get those W-9 forms completed before handing over prizes! I've seen too many situations where organizations had to track down winners months later for their tax ID numbers, and by then people have moved or become uncooperative. Keep detailed records of everything - prize amounts, ticket prices, winner information, and copies of all forms issued. The IRS loves documentation, especially for tax-exempt organizations.

This thread has been incredibly helpful! I'm treasurer for a small community center and we've been doing monthly 50/50 raffles but honestly had no idea about these reporting requirements. Quick question about timing - when do these tax forms (W-2G and 1099-MISC) need to be sent to winners and filed with the IRS? Is it by January 31st like other tax forms, or is there a different deadline for gambling winnings? Also, I'm wondering about backup withholding. If a winner refuses to provide their SSN on the W-9 form, I assume we need to withhold 24% backup withholding on any reportable prizes? Or can we just refuse to pay out the prize until they provide the information? Thanks everyone for sharing your experiences - this is exactly the kind of real-world guidance that's impossible to find in IRS publications!

This has been such an informative discussion! As a newcomer to nonprofit administration, I'm learning so much from everyone's experiences. I wanted to add something I discovered recently - make sure you understand your state's charitable gaming license requirements too. In my state, we needed a specific charitable gaming license even for our small annual raffle, and the license application required us to specify our prize structure and reporting procedures upfront. The state gaming commission also required us to file a separate annual report showing all our raffle activities, winners, and tax forms issued. This was completely separate from our federal tax obligations, so don't forget to check if your state has similar requirements. Also, @Keisha Johnson, since you mentioned this is an annual event, you might want to consider setting up a standardized process now. We created a simple "raffle winner packet" that includes the W-9 form, a cover letter explaining tax implications, and instructions for the winner. Having this ready to go makes prize distribution much smoother and ensures we don't miss any steps in the heat of the moment after the drawing. Thanks to everyone who shared their tools and services - I'm definitely going to look into some of these resources before our next fundraising event!

As someone who's been helping nonprofits navigate tax compliance for several years, I want to emphasize how important it is to get these raffle reporting requirements right from the start. The IRS has been increasing scrutiny on tax-exempt organizations, and proper documentation of gambling activities is definitely on their radar. One thing I haven't seen mentioned yet is the importance of keeping detailed records of your ticket sales and prize distribution for at least 3 years (though I recommend 7 years to be safe). This includes not just winner information, but also total tickets sold, gross receipts, and how the proceeds were used for your charitable purposes. Also, @Keisha Johnson, since you mentioned your tickets are $40 each or 3 for $80, make sure you're calculating the "wager" amount correctly for the 300x test. For bundle sales, you'd use the effective per-ticket price ($26.67), not the individual ticket price, when determining if W-2G reporting is required. For your specific situation, Paolo's advice is spot-on - W-2G for the grand prize, 1099-MISC for the second prize, and don't forget about the withholding requirements NeonNebula mentioned for the larger prize. One final tip: consider consulting with a CPA who specializes in nonprofit tax issues, especially if your raffle grows larger in future years. The cost of professional guidance upfront is much less than dealing with IRS penalties later!

This entire discussion has been incredibly enlightening! As someone who just joined the board of a local animal rescue that's planning our first major raffle fundraiser, I had no idea about the complexity of these reporting requirements. A few things I'm taking away from this thread: 1. Get W-9 forms from winners BEFORE distributing prizes (genius tip!) 2. Use the effective ticket price for bundle sales when calculating the 300x threshold 3. Check state licensing requirements - this seems to be a common oversight 4. Keep detailed records for at least 7 years 5. Consider the withholding obligations for larger prizes @Keisha Johnson - thank you for starting this discussion! Your specific example with the $12k grand prize and $1,300 second prize really helped illustrate how these rules work in practice. One question I have after reading everything: for organizations just starting out with raffles, would it make sense to structure prize amounts to avoid some of these reporting thresholds initially? For example, keeping all prizes under $600 to avoid any form requirements while we get comfortable with the process? Or does that create other complications I'm not thinking about? I'm definitely going to look into both the taxr.ai tool and finding a CPA with nonprofit expertise before we launch our fundraiser. Better to invest in getting it right from the start than deal with compliance issues later!

This thread has been incredibly helpful for understanding raffle tax reporting! I'm the treasurer for a small veterans' nonprofit and we've been running monthly 50/50 raffles without realizing we might need to issue tax forms for larger winnings. After reading through all the advice here, I have a quick clarification question: if we have multiple small raffles throughout the year where the same person wins prizes totaling over $600 (but each individual prize is under $600), do we need to aggregate those winnings for reporting purposes? Or is the $600 threshold applied to each individual prize event? For example, if someone wins $400 in our March raffle and $300 in our June raffle from the same organization, that's $700 total - but each individual win was under the reporting threshold. Also, thank you @Keisha Johnson for asking the original question - this discussion has saved me from making costly compliance mistakes! The resources mentioned here (especially the taxr.ai tool and Claimyr for IRS questions) are going on my bookmark list immediately. One more thing I learned: the importance of having clear raffle rules printed on tickets stating that winners must complete tax forms before prize distribution. We definitely need to add this language to our next batch of tickets.

This has been such an educational thread! I'm part of a small community organization that's been doing annual raffles for fundraising, but honestly we've been pretty casual about the tax reporting side of things. Reading through everyone's experiences, I'm realizing we probably need to get our act together before our next event. The distinction between W-2G and 1099-MISC requirements is much clearer now, thanks to Paolo's explanation and all the follow-up discussion. I'm particularly grateful for the practical tips about collecting W-9 forms upfront and keeping detailed records. We've definitely been winging it on documentation, which sounds like it could bite us later if we ever get audited. @Keisha Johnson - your original question really opened my eyes to how many compliance details I hadn't considered. The bundle ticket pricing calculation for the 300x threshold is something I never would have thought about correctly. One thing I'm curious about - does anyone know if the IRS has specific guidance documents for small nonprofits about charitable gaming compliance? I'd love to have something official I can reference when explaining these requirements to our board members who always ask "are you sure we need to do all this paperwork?" Thanks to everyone who shared their tools and experiences. This community is incredibly valuable for those of us trying to do fundraising right while staying compliant!

This thread has been absolutely invaluable! I'm relatively new to nonprofit board service and had no idea about the complexity of raffle tax reporting. Reading through everyone's real-world experiences has been like getting a masterclass in charitable gaming compliance. A few key takeaways I'm noting for our upcoming fundraiser: - The 300x wager calculation using effective ticket price for bundles (crucial detail I would have missed!) - Collecting W-9 forms before prize distribution rather than chasing winners later - The distinction between when to use W-2G vs 1099-MISC based on specific thresholds - State licensing requirements that are separate from federal tax obligations @Keisha Johnson - your specific example really helped illustrate how these rules work in practice. The $12k grand prize clearly needs a W-2G, and now I understand why the $1,300 second prize requires a 1099-MISC even though it doesn't meet the W-2G threshold. The tool recommendations (taxr.ai for form analysis and Claimyr for IRS phone assistance) are going straight to my resource list. As a volunteer treasurer with limited time, anything that can streamline compliance while ensuring accuracy is incredibly valuable. One quick question for the group: for organizations that do multiple fundraising events throughout the year (not just raffles), do these same reporting principles apply to other prize-based activities like silent auctions or casino nights? Or are there different thresholds and forms for those activities? Thanks everyone for sharing your expertise - this community knowledge-sharing is exactly what small nonprofits need to navigate these regulatory requirements successfully!

This entire discussion has been a goldmine of practical information! I'm jumping in as someone who just took over as treasurer for our local community center that runs quarterly raffles for building maintenance funds. After reading through all these detailed responses, I'm realizing we've been flying blind on tax compliance. We've had a few winners over $1,000 in the past year and honestly never thought about issuing any tax forms. This thread is both eye-opening and slightly terrifying! The clarity everyone provided on the W-2G vs 1099-MISC distinction is incredibly helpful. I was completely unaware that there were different forms for different prize scenarios. The bundle ticket pricing calculation that @Giovanni Colombo mentioned is something I definitely would have calculated wrong - we do 5 tickets for $20 deals regularly. I'm definitely going to look into the taxr.ai tool that @Amina Diallo recommended. Having something analyze our raffle structure and tell us exactly which forms we need sounds like a huge time-saver, especially since I'm learning all this as a volunteer with a full-time day job. Also adding Claimyr to my list after seeing the success stories from @Javier Cruz and @Malik Thomas. The IRS phone system has been my nemesis when trying to get answers about our 990-EZ filings. Quick question: for our upcoming spring raffle, we're planning a $5,000 grand prize with $25 tickets. Based on everything discussed here, that would definitely require a W-2G (over $600 and 200x the wager), plus the 24% withholding that @NeonNebula mentioned, correct? Want to make sure I understand before we finalize our prize structure. Thank you @Keisha Johnson for asking this question and everyone for sharing such detailed, practical guidance!

This has been such an incredibly thorough and helpful discussion! As someone who just joined the board of a small food pantry that's planning to add raffles to our fundraising mix, I feel like I've gotten a complete education in charitable gaming compliance just from reading through everyone's experiences. The practical advice shared here is exactly what small nonprofits need - real examples with specific dollar amounts, actual tools that work, and lessons learned from mistakes. I especially appreciate how @Paolo Longo broke down the W-2G vs 1099-MISC distinction so clearly, and how multiple people confirmed the approach with their own experiences. A few things I'm definitely implementing based on this thread: - Creating a "winner packet" with W-9 forms and tax explanation materials (thanks @Mia Green!) - Checking our state's charitable gaming license requirements before we launch - Using the effective ticket price for any bundle pricing in threshold calculations - Setting up proper record-keeping systems from day one The tool recommendations are going straight to my resource list. As a volunteer handling compliance alongside a full-time job, having services like taxr.ai to analyze requirements and Claimyr to actually reach IRS agents sounds invaluable. @Keisha Johnson - thank you for asking such a practical, detailed question that sparked this amazing knowledge-sharing session. Your specific prize amounts and ticket pricing gave everyone concrete examples to work with rather than abstract concepts. One follow-up question: for organizations just starting with raffles, would you recommend running a small "test raffle" first (maybe keeping prizes under reporting thresholds) just to get comfortable with the administrative side before scaling up? Or is it better to just dive in with proper systems from the start? This community is such a great resource for nonprofit volunteers trying to navigate these regulatory requirements while focusing on our charitable missions!