Can Your Boss Deduct A Charitable Contribution From Your Paycheck?

By Amy E. Feldman

PHILADELPHIA (CBS) - Can your boss deduct a charitable contribution from your paycheck?

It's one thing when your boss tells you that instead of giving employees a holiday gift, the company is making a donation in the employees' honor to a charity (to which many employees say: I'd be honored to get fifty bucks in my own pocket). But can your employer, when supporting a particular charity, set up payroll deductions through which an employee "MAY" contribute? Yes, so long as you sign up voluntarily.

Charitable contributions—particularly those that come right out of your paycheck are regulated by both federal and state laws. In general so long as it was your decision to make the pledge, it's legal for your employer to deduct it directly from your paycheck, collect the contributions and give them to the charity. But even though it's a payroll deduction, it's an after-tax contribution, not a pretax deduction like an IRA.

Now you can deduct it if you itemize your tax return, so long as you keep a pay stub or w-2 that shows the date and amount of the contribution and a pledge card from the charity that shows the name of the organization. If the deduction is more than $250 in a single pay, that pledge card also has to say that the organization does not provide goods or services in return for any contribution made to it by payroll deduction other than the good feeling of being charitable and the appreciation of your boss.