IRS Approves Special Leave-Based Donation Programs to Support Charities for Hurricane Irma Recovery

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The IRS is making it possible for employees to redirect payroll amounts they are owed to charities supporting recovery efforts from Hurricane Irma.

If this election is made, employees won’t be taxed on the income they were due, while employers will be able to deduct the charitable contributions (IR-2017-154, 9/14/17).

This tax break is comparable to the tax relief afforded a few weeks ago for leave-based donations assisting victims of Hurricane Harvey.

Under the special IRS-approved program, employees may choose to forgo their vacation, sick or personal leave in exchange for cash payments the employer makes to qualified charitable organizations providing relief for the victims of this disaster. The deadline for this tax break is January 1, 2019 — more than a year from now.

When the election is made, the donated leave is removed from the taxable income or wages of employees. Although employees won’t be able to claim any charitable deduction on their personal tax returns, employers can deduct the cash payments on business returns, subject to the usual rules.

For instance, suppose an employee has accumulated enough sick leave to be paid $5,000 at the end of 2017. The employee may notify the employer that he or she wants to reward a hurricane-based relief fund instead of receiving the taxable wages.

In turn, the employer makes a cash payment of $5,000 to a qualified charity. The result: The employee pays zero tax on the $5,000 in income he or she is forgoing, and the employer claims a $5,000 tax deduction.  

This is hardly the first time the IRS has approved such a program. Similar relief was available following Hurricane Katrina in 2005, Hurricane Sandy in 2012, the Ebola outbreak in West Africa in 2014 and Hurricane Matthew and severe flooding in Louisiana in 2016.

This is just one step the IRS is taking to benefit Harvey and Irma victims. More information on other tax relief available to victims of Hurricane Irma can be found at irs.gov/hurricaneirma.

About Ken Berry

Ken Berry

Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a wide variety of newsletters, magazines, and other periodicals.           

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