- Find out how unused paid vacation time, sick leave and personal time can be used as COVID-19 relief donations.
- Learn more about your employer’s function in this donation process.
- Find out why this is such a great donation opportunity.
On March 13, 2020, the President issued an emergency disaster declaration under the Stafford Act due to the COVID-19 pandemic. The disaster area covers all 50 states, the District of Columbia, and five U.S. Territories. Emergency disaster declarations have occurred before, such as in the wake of major disasters like Hurricanes Katrina, Sandy, and Maria. At these times, the IRS provides special relief that allows employees with unused paid vacation, sick leave, and personal leave time to use them as COVID-19 relief donations. Fiducial has all the information you need about this donation opportunity below.
COVID-19 relief donations of unused paid vacation, sick leave and personal leave time
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. Additionally, your employer can deduct the amount of COVID-19 relief donations as a business expense.
However, since the income isn’t taxable to you, you will not be allowed to claim COVID-19 relief donations 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 you are subject to AGI-based limitations.
This special relief applies to all COVID-19 relief donations made before January 1, 2021. This gives individuals plenty of time to forgo their unused paid vacation, sick and leave time and have the cash value donated to a worthy cause.
How to donate
This is a great opportunity to provide sorely needed help in the ongoing COVID-19 emergency. And it doesn’t cost you anything but time. Contact your employer to make COVID-19 relief donations. If your employer is unaware of this program refer them to IRS Notice 2020-46 for further details.
Have questions related to donating leave time for COVID-19 relief efforts or other charitable contributions? Call Fiducial at 1-866-FIDUCIAL or make an appointment at one of our office locations. Ready to book an appointment now? Click here. Know someone who might need our services? We love referrals!
For more small business COVID-19 resources, visit Fiducial’s Coronavirus Update Center to find information on SBA loans, tax updates, the Paycheck Protection Program, paid sick and family leave, and more.
*Normally, charitable contributions are deductible only if you itemize your deductions on Schedule A as part of your 1040 return. This means you wouldn’t get a tax benefit from your donations if you claim the standard deduction instead of itemizing. However, the CARES Act, passed in late March, 2020, allows up to $300 of cash charitable contributions made in 2020 to be deducted from your income even if you use the standard deduction. Of course, as noted above, you can’t deduct the value of COVID-19 relief donations made through leave-based donation programs in any case. Instead the leave time is non-taxable.