By Daily Press staff
The Internal Revenue Service is encouraging leave-based donation programs for victims of Hurricane Katrina. Employees may donate their unused vacation, sick or personal leave in exchange for cash payments which their employer can then make to qualified tax-exempt organizations providing hurricane relief.
The employer must agree to set up such a program, and make the cash payment to the tax-exempt organization by the end of 2006. Employees do not have to include the amount of their donated leave in their income, and employers will be permitted to deduct the amount of the cash payment.
Since employees will not be taxed on the value of the leave, they cannot take a charitable contribution deduction on the donated leave.
“It’s a win-win situation because most taxpayers don’t itemize on their taxes and so they can’t claim a tax deduction for any of their charitable contributions,” said Victor Omelczenko, IRS spokesman in Los Angeles. “With this donation program, any taxpayer can contribute unused leave and not have it count toward taxable income while still helping Hurricane Katrina victims.”
For those citizens who want to make charitable donations directly to a specific charity, the IRS encourages them to make sure that it is a qualified charity by searching an IRS-approved list.
The Web site at www.IRS.gov has an on-line search feature that allows people to find qualified charities. Some organizations, such as churches and governments, may be qualified even though they are not listed.
The IRS does not endorse any charity. However, the Federal Emergency Management Administration has urged citizens to make cash donations to volunteer agencies with whom it is working.
The U.S. government’s official Web portal, FirstGov.gov, also contains disaster-relief information.
Taxpayers may claim a deduction for contributions to charitable organizations only if they itemize deductions on Schedule A of their Form 1040.
“Taxpayers should retain proof of the contribution and, if the amount is more than $250, must obtain an acknowledgment from the charity for the amount to be deductible,” Omelczenko said. Dining on Japanese cuisine to benefit Katrina victims
Originally published in the Santa Monica Daily Press print edition on October 6, 2005. Read the original PDF.