Charitable Donation Accounts and Payroll Giving
A charitable donation account lets employees give through payroll, with the employer sometimes matching. The employee’s gift is the employee’s, and the tax treatment of a match depends on how it is paid.
What to know.
An employee who gives by payroll deduction can generally claim the deduction on their own return if they itemize. Consent for the payroll deduction should be in writing.
If the employer matches, the match is usually the employer’s charitable payment. Ask your CPA how it should be reported.
Where to look next.
Giving Funds Overview
How these funds work.
Education and Giving Benefits
Related programs.
Wellbeing and Population Health
Programs that support employees.
How Payroll Giving Works.
Employees direct a part of each paycheck to a charity, and the employer sends the funds. The gift is the employee’s, and the deduction rules belong to the employee’s own return.
Employers sometimes match gifts. The tax treatment of the match depends on how it is paid and recorded, so involve your adviser before launching.
Keep a record of who gave what and to which charity, since employees may need documentation.
Common questions on this topic.
Four questions to settle before you rely on it.
Who gets the tax deduction?
The employee, if they itemize, subject to the rules. The employer may have a separate treatment for its own contribution.
Does a match change anything?
The match is typically the employer’s charitable payment. Ask your CPA.
Do we need written consent?
Yes. Get written authorization for payroll deductions.
Which charities qualify?
Generally organizations recognized by the IRS. Check eligibility before listing.
Can employees choose any charity?
Employers often limit choices to qualified organizations. Ask your adviser.
Do we report the gifts?
Payroll records show deductions, and employees may need a written acknowledgment.
Can a match be capped?
Yes. Set a cap in the policy.
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General information, not legal or tax advice. Plan-specific questions belong with your counsel or CPA, and we will bring them in.
Related guides.
Giving Funds
The overview this page belongs to.
Compliance Services
How CFH supports the compliance side of your plans.
Employee Crisis Funds
A related question on the same program.
Where the Rules Come From.
The laws and rules named on this page link to the statute or regulation they come from. This is general information, not legal or tax advice, and rules change, so check the current text.
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