Raffles are a classic fund-raiser for charities and schools. Buying a ticket lets you help your community, but it doesn't help you claim a deduction for a charitable donation. The IRS classes money spent on raffles and lotteries as "contributions from which you benefit" and therefore it is generally not deductible. If you win the raffle, you may even end up owing tax.
Entering a raffle -- or a lottery, or playing charity bingo -- is a form of gambling. If you win anything -- cash, a vacation trip, a bottle of wine -- the IRS expects you to report that income. For noncash winnings, the income you gain equals the fair market value of whatever you won. If you win something worth more than $600, the charity should send you and the IRS a 1099 form reporting your income. You pay regular income tax on whatever you win.
One way to write off your raffle ticket is as a gambling loss. The IRS allows you to write off gambling expenses, but only up to the amount of your winnings. If you buy $20 worth of tickets and win a $100 prize, for example, you can take a $20 deduction; if you lose and don't have other winnings, you can't claim anything. You have to itemize deductions on Schedule A to claim gambling losses. If you take the standard deduction, you're out of luck.
When you win the raffle, one way to claim a deduction is to give your prize back to the charity. It won't help your overall tax picture because once you accept the prize it counts as income. The most your donation can do is reduce the amount of added tax you pay. If you win property that would be subject to capital gains tax if you sold it, you can deduct only 30 percent of its value when you donate it.
One cheap lottery ticket isn't worth itemizing deductions for. If you itemize anyway, however, to deduct medical bills or mortgage interest and you have gambling income to offset, claiming even a small gambling loss cuts your taxes. To write off your losses, you have to keep records showing when you incurred them, as well as receipts or the actual tickets to prove that your losses are legitimate.
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.