The Internal Revenue Service has made changes in order to help with the Ebola outbreak in West Africa, by removing a potential tax angle that might discourage some workers from giving under workplace leave-donation programs.
According to the tax code, employees are often able to arrange for their employers to make charitable donations of their unused time off, such as vacation or sick leave. There are several different structures for these programs that vary slightly. Typically, the employer will pay a charitable organization a cash sum equal to the value of the donated time.
However, many of the programs have encountered cumbersome tax rules that have an impact on the employee who donated. Employees are often required to recognize their donated time as income, and then get a charitable deduction to offset the income. This structure can lead to unexpected withholding from their paychecks as well as complicated calculations during tax-filing season.
In the past, the IRS has allowed employees to bypass those hassles by announcing that it would not require them to recognize the value of their donated time off as income. On Wednesday, the IRS said it would do the same for donations to help with the Ebola outbreak in West Africa.
Source: McKinnon, John, "IRS Eases Tax Burden on Ebola Donations," The Wall Street Journal, October 29th, 2014