Record keeping is very important for many reasons:
The most important reason is for taxes. When you win a big prize, it may affect your income tax status. Even if it doesn't affect your tax status, you may deduct sweepstakes expenses up to the amount of the value of the prize, but only if you keep complete and accurate records of your actual expenses. This includes postage, sweepstakes supplies, newsletter subscriptions, and so forth.
Your records will need to satisfy all requirements from the Internal Revenue Service, so make sure your records are accurate. You must be able to prove that all of your supplies (and postage) you claim were used specifically for entering sweepstakes. For example, you buy stamps for reasons other than entering sweepstakes (paying bills, sending cards, etc.). Therefore, a receipt for buying the stamps is not going to be enough to claim the full amount of your receipt. You need to be able to show how many sweepstakes you entered and when you entered them. This is when accurate record keeping is very important.
Another important reason is to control your sweepstakes budget. If you know exactly how much you can afford to spend each month on supplies and postage, then keeping accurate records of how many sweepstakes you enter will help contain your budget. You will be much less likely to spend more than you allot if you keep good records of how many sweepstakes you are entering.
Also, keeping accurate records will help you avoid entering sweepstakes more than any restrictions may allow. For example, there are many sweepstakes that allow only one entry per person or household. If you keep accurate records, you will know exactly which sweepstakes you entered and how many times.
What Information Should I Record?
There are many different ways to keep good records of your sweepstakes activities. You can keep them manually or use a computer, but no matter which way you prefer, there is basic information that needs to be recorded:
The name of the sweepstakes is basic information, but it may cause a little confusion because sponsors often promote different versions of a sweepstakes, using different names for different versions. The best way we've found to record them is by the sponsor's name, then the sweepstakes name, for example: Discover Card Adventure DISCOVERed Sweepstakes. The first line of the address to send your entries is Adventure DISCOVERed. It doesn't tell you who is sponsoring the sweepstakes. Therefore, if the Discovery Channel held a sweepstakes with a similar address line, you may not be sure which one you entered.
The entry deadline is important to record, but mainly for your own records, not for tax purposes. You need to be able to know when the sweepstakes ends in order to get your entries in on time. There's nothing more frustrating then receiving your entries back because of a closed PO box.
The method of entry is very important to record accurately. This is what will let you know how much you are spending in supplies. Postage for sending in postcard entries is going to be less expensive than mailing envelopes containing 3x5's. To simply put a check mark or number next to a list is not going to be helpful enough to let you know what you are spending each month.
This is why the worksheets in each Winning Ways issue are so helpful. The columns are already set up for you, so you can just put a mark or number into how you submitted your entry. Also, as a general rule, colored or decorative envelopes are more expensive than plain white ones, so be sure to note those in the appropriate columns, too. Also remember to record any phone calls for entries that you make. Most sweepstakes provide 800 numbers if the method of entry is a phone call, but some provide a 900 number, which may have a fee associated with it. The sweepstakes should note how expensive the phone call will be for one entry, so be sure to write that down. Online entries are harder to claim. Because you use your computer and Internet access for things other than entering sweepstakes, you will not be able to deduct your monthly Internet service charge. If you do buy any online sweepstakes services or software for sweepstakes purposes only, you may be able to deduct those.
The number of entries sent is very important. Not only will it help you keep control of your expenses, but it will let you know if you have already entered particular sweepstakes and how many times. For example, if a sweepstakes also has an online method of entry, you may be restricted to one entry online and one entry via mail-in, or you may be restricted to only one entry, no matter what method of entry.
Record Keeping Methods
There are many different methods of keeping records. Whether you choose to keep your records in a hardcopy format or in an online format, make sure your records are thorough.
For hardcopy methods, Winning Ways helps you keep accurate records through the use of its worksheets. We provide the sweepstakes name, entry deadline, and columns for method of entry. It's easy to mark them up and retain them at the end of the month.
For online methods, there are many good software programs that will help you keep accurate records of which sweepstakes you enter, the method, and how often, such as CompWin and SweepsBase, or you can use available programs and utilities such as Excel, Notepad, or Wordpad.
Again, we cannot stress enough how important it is to keep accurate records of your entries. Although it sounds like a lot of work, it's worth it. Not only will you have accurate records for entering the sweepstakes, but when you get that big win, it will be so easy to just review all of your entries and add up your expenses for your deductions.
If you have any questions regarding record keeping, please send us mail. We would be happy to discuss them with you.
Susan Donahue publishes Winning Ways, a monthly sweepstakes newsletter, filled with hunts, tips, and hundreds of sweepstakes to enter every month. You can reach her at winningways @onlinesweeps.com or visit her Web site at onlinesweeps.com.
Sign up for our free eNewsletter Dollar Stretcher for Parents.
Looking for an answer to a frugal living question? Click here to ask a
Dollar Stretcher Stretchpert!
Copyright 1996 - 2013 "The Dollar Stretcher, Inc." All rights reserved unless specifically noted.
Contact the Dollar Stretcher at:
PO Box 14160
Bradenton FL 34280
"The Dollar Stretcher, Inc." does not assume responsibility for advice given. All advice should be weighed against your own abilities and circumstances and applied accordingly. It is up to the reader to determine if advice is safe and suitable for their own situation.