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Wanting to Help Katrina Victims But Short on Cash? Donate Your Leave to Help Katrina Victims
During the holiday season, the IRS is continuing to encourage employers to establish Hurricane Katrina Relief leave donation programs. Under a leave donation program, employees can elect to forgo their vacation, sick or personal leave in exchange for the employer making cash payments to a qualified tax-exempt organization providing relief for victims of Hurricane Katrina. “Everybody wins under this program,” said IRS Commissioner Mark W. Everson. “Employees can give without paying cash. Companies get the tax deduction. And the money gets to people in need.”
Benefit for Employees:
Donating extra vacation time or sick leave allows employees to help without making an out-of pocket contribution. Employees authorize their employer to use some of their accrued leave. The employer then converts it into cash and makes a donation to a qualified charity that is providing relief to Hurricane Katrina victims. For example: If an employee earns $10 per hour and donates 8 hours of leave that becomes an $80 donation.
Employees can help Katrina victims without dipping into their cash or income. Nothing changes on the W-2 or income tax return. The donated leave is simply subtracted by the employer from the employee’s leave balance. Benefit for Employers:
Employers who participate can use the donations as charitable deductions on their tax returns. The IRS is also allowing them to take these donations as business deductions, if they choose. Cash contributions by the employer must be made to the charitable organization by Dec. 31, 2006. The amounts contributed are not subject to employment taxes. IRS approval is not required to establish a leave donation program. A leave donation program can be adopted and administered easily by following the program guidelines available on the IRS.gov Web site.
How to donate unused leave:
Employees can ask their employer if they have established or are considering establishing a leave-donation program for the victims of Hurricane Katrina. If no program has been established, employees may want to direct their employer to www.irs.gov, which outlines the benefits of establishing a leave donation program. Employers are encouraged to have a program, but it is completely voluntary. Employees then follow the leave donation guidelines established by their employer.
“The leave donation program makes it easier for those to help the Hurricane Katrina victims go about the difficult task of rebuilding their lives,” said IRS spokeswoman Dianne Besunder.
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