As part of the emergency disaster declaration made by President Trump on March 13, 2020, it became possible for employees to donate their unused paid vacation time, sick leave, and personal time off to qualified charities that provided COVID-19 relief in 2020.
The IRS recently extended leave donations through 2021. Check with your employer to see if they are participating and for more details. It is an opportunity for you to make donations without costing you out-of-pocket cash.
Here is how it works: If your employer is participating, you can relinquish any unused and paid vacation time, sick leave, and personal leave for cash payments which your employer will donate to COVID-19 relief charitable organizations. The cash payment will not be treated as wages to you and your employer can deduct the amount donated as a business expense. However, since the income isn’t taxable to you, you will not be allowed to claim the donation as a charitable deduction on your tax return. Even so, excluding income is often worth more as tax savings than a potential tax deduction, especially if you generally claim the standard deduction or are subject to AGI-based limitations.
This special relief applies to all donations made before January 1, 2022, giving individuals plenty of time to forgo their unused paid vacation, sick and leave time and have the cash value donated to a worthy cause.
This is a great opportunity to provide sorely needed help in the ongoing COVID-19 emergency without costing you anything but time. Contact your employer to see about participating. If your employer is unaware of his program, refer them to IRS Notice 2020-46 and 2021-42 for further details.
If you have questions related to donating leave time for COVID-19 relief efforts or other charitable contributions, or need assistance, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.