August 5, 2021 1:48 am

Tax Breaks for Leave-Based Donation Programs for COVID-19 Extended

If an employer has a leave-based donation program, employees may contribute their unused leave time (e.g., vacation, sick, and personal days) for the benefit of employees who need the time. Usually, employees remain taxed on their donated leave time. However, for 2021, if the employer makes a cash equivalent donation of the contributed leave time to IRS-approved charities before January 1, 2022, for the benefit of COVID-19 relief, employees aren’t taxed on their donations. They can’t take a charitable contribution, but the donated leave time won’t appear on their Form W-2.

This break was put into effect in 2020 following the President’s national disaster declaration. Due to the ongoing nature of the pandemic, the break applies through 2021 (Notice 2021-42).



Tax Glossary

Capital loss carryover

A capital loss that is not deductible because it exceeds the annual $3,000 capital loss ceiling. A carryover loss may be deducted from capital gains of later years plus up to $3,000 of ordinary income.

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