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Posted 12/11/06; Updated 10/07/08
The Internal Revenue Service announced new reporting rules for payroll deduction campaigns on December 1, 2006. The new rules clarify federal legislation, the Pension Protection Act of 2006, that was enacted by Congress this summer. This new law requires more complete documentation of all monetary donations, including those made through payroll deduction.
Similar to previously existing rules, the new IRS rules require taxpayers who wish to deduct their contributions made through payroll deduction to retain a pay stub, Form W-2, or other document furnished by the employer that shows the total amount withheld for payment to charity. The taxpayer must also maintain a written communication from the charity stating the organization's name and the contribution date and amount. Under the new rules, however, all contributions must be documented in this manner. Under previous rules, such documentation was only required for donations of $250 or more per pay period. The new requirements are effective for contributions made in tax years beginning after August 17, 2006.
College employees who have elected a deduction through their paychecks for United Way can retain a copy of their last paystub which shows the year total of the donation. The amount is not printed on the W-2. The United Way pledge site offers an option to print a confirmation by donors logging into https://donor.united-e-way.org/ (using the campaign code, username and password provided in the United Way email)
If a payroll deduction contribution to a charity is greater than $250, the written document must include a statement that the organization doesn't provide goods or services in exchange for any such contributions.
The new IRS guidance, and accompanying press release, can be found on the IRS web site as follows:
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