Page 235 - Essentials of Payroll: Management and Accounting

ESSENTIALS of Payr oll: Management and Accounting
her income tax return at year-end in order to prove the amount of con-
tributions itemized on the tax return.
The Internal Revenue Code (IRC) requires employees to have writ-
ten substantiation from a charity if the amount of a contribution exceeds
$250. However, this requirement is for individual contributions of $250

or more, which is unlikely to be the case for a single payroll deduction
(each of which is considered an individual contribution). Furthermore,
charities are unlikely to have enough information to issue a written sub-
stantiation because they receive a lump-sum payment from the employer
and usually have no means for tracking individual contributions.Conse-
quently, employees who make such large contributions should use the
year-end remittance advice attached to their paychecks as proof of the

year-to-date amount of the contributions made; they should also retain
their original pledge cards as proof of the commitment made.
Example. David Anderson and Charles Weymouth both make con-
tributions to the United Way. Mr. Anderson has authorized the compa-
ny to make regular deductions of $80 from each of his weekly pay-
checks, which the company will match and forward to the charity.
Because each contribution is less than $250, there is no need to obtain
a written substantiation from the United Way.
Charles Weymouth has authorized the company to make exactly the

same-size annual contribution,but he wants it to be taken from his month-
end paycheck, which increases the individual deduction to $320 ($80 x 4
weekly paychecks). Because the individual deduction exceeds $250, Mr.
Weymouth must obtain a written substantiation of the contribution from
the United Way or obtain some similar form of evidence for the IRS.

Child Support Payments

The payroll manager will almost certainly see court-ordered child sup-
port withholding orders at some point during his or her career. Tightly

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