Are Nonprofit Raffle Ticket Donations Tax Deductible?

By Cindy DeRuyter, J.D.

Are Nonprofit Raffle Ticket Donations Tax Deductible?

By Cindy DeRuyter, J.D.

When you donate money to a qualified nonprofit organization, you may be able to deduct part of the contribution on your tax return. Unfortunately, buying a raffle ticket to support a nonprofit organization is not a deductible expense. That's because you are not actually making a charitable donation but are gambling on the chance that you have the winning ticket.

Person holding a roll of yellow tickets

Financial or Economic Benefit Rule

Internal Revenue Service (IRS) laws allow people who make charitable gifts to 501(c)(3) charitable organizations and select other nonprofit companies to deduct those gifts when itemizing deductions on income tax returns. However, you cannot claim a deduction if you receive or expect to receive an economic benefit in exchange for your donation.

This means you cannot deduct the amount paid for raffle tickets, lottery tickets, bingo cards, or other games of chance where you could win something as a result of your purchase. Similarly, you cannot deduct contributions to lobbying organizations to influence legislation, contributions made to a retirement community that relate to admittance or room and board for you or another person, or dues paid to a fraternal benefit society.

Possible Deduction for Donating a Raffle Prize

If you have property that you donate to a charitable organization so they can turn around and award it to the winner of a raffle, you may be able to claim a tax deduction. However, there are rules associated with this type of charitable deduction too.

Generally, you can only take a deduction if you donate all of your interest in the property, the donation is to a qualified nonprofit organization, and you itemize deductions on your tax return. The gift must be irrevocable and you cannot exercise any control over the property after completing the gift if you want it to qualify as a tax-deductible contribution. This means that if you raffle off a week's stay at your lake house, you cannot take a tax deduction because you haven't relinquished all control over the asset. If you were to sign the property deed and all associated rights over to the charitable organization, chances are good that you would be able to claim a tax deduction.

Deduction for Gambling Losses

Although you cannot take a tax deduction for buying a raffle ticket, you may be able to deduct the amount spent on losing tickets to the extent you had gambling winnings of at least that amount. For example, if you bought $100 worth of raffle tickets that did not win but won $500 on a $5 raffle ticket, you would have to claim $500 in income but could deduct the $100 you spent on tickets that didn't win. However, if you only won $50 instead, you could only deduct $50 in losing lottery tickets.

While buying lottery tickets cannot get you a tax deduction, you are still supporting the underlying charitable organization and hopefully having some fun in the process. IRS tax laws about deductions for charitable contributions and gambling losses are complex. For this reason, it is often helpful to consult with a tax professional to determine how certain actions will affect your specific tax situation.

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