Leave-based donations for hurricane relief
Hurricanes Harvey and Irma have sparked a nationwide movement to donate funds to help those affected. One way some companies are pitching in is through leave-based donation programs.
Leave-based donation programs allow employees to opt to forgo sick, vacation, or personal time and, in exchange, the business makes a contribution for the cash value of that time to eligible relief organizations.
For individual taxpayers who forgo time off in exchange for a leave-based donation by the company, the cash value of that donated time won’t be included in their taxable income as long as two conditions are met: First, cash payments must be made to eligible 170(c) organizations for the relief of victims of Hurricane Harvey, Tropical Storm Harvey, Hurricane Irma, and Tropical Storm Irma and, second, the donation must be made before Jan. 1, 2019.
Since the income won’t be included in employees’ taxable income, they can’t deduct the cash value of the time as a charitable contribution on their personal income tax return.
Similarly, for employers making leave-based donations, the cash paid to relief organizations will be allowed to be deducted as a regular trade or business expense for tax purposes.