Leave-based IRS Tax Deductible Donation

There’s a unique type of donation you can make from which you can claim a tax deduction. It is a leave-based donation program to help victims of Hurricane Sandy. In this program, you choose to forgo your vacation, sick, or personal leave in exchange for cash payments made by your employer to charitable organizations for the relief of those hit by the hurricane.

For this program, the IRS has issued certain guidelines for employers.

Firstly, the IRS will not assert that the payments constitute gross income or wages to the employees, provided that the payments are made before January 1, 2014, to qualified organizations under Code Sec. 170(c) for the relief of hurricane victims.

Secondly, the opportunity to make the choice to forgo leave resulted in constructive receipt of gross income or wages for employees

And thirdly, an employer will only be allowed to deduct the cash payments under the rules of Code Sec. 170, rather than Code Sec. 162. This means these payments need not be included on your Form W-2.

Finally, electing employees may not claim a charitable contribution deduction under Code Sec. 170 with respect to the value of the forgone leave excluded from compensation.


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