Deductible donation?

[AccTaxMan]

A postal worker donates 2 days of his holiday pay to other postal works who are in financial need. The donation is done through a department with the USPS. From what I understand based on what the postal worker (my client) explains, it is a program sponsored by the USPS to let postal workers help their fellow postal employees in need.

Is it a tax deductible donation?

[Uncle Sam]

Deductible Donation

Who determines which postal employee gets how much benefits?
Your client - or an independent governing body?

[taxea]

labor is not deductible. If the post office is not a non-profit pay is not deductible

[ChEAr$]

A postal worker donates 2 days of his holiday pay to other postal works who are in financial need. The donation is done through a department with the USPS. From what I understand based on what the postal worker (my client) explains, it is a program sponsored by the USPS to let postal workers help their fellow postal employees in need.

Is it a tax deductible donation?

I've heard of these plans somewhere and in accounting for the two days, the donor's w2 simply reflects 2 days less pay. So not a question of a deduction, rather less taxable pay.

[FEDUKE404]

Likely a valid contribution

labor is not deductible. If the post office is not a non-profit pay is not deductible

I did not see any mention of labor in the original post.

If the funds being donated are somehow going to a qualifying (even if internal) agency, I see no problem taking the deduction. My guess is something as large as the US Postal Service has already covered this aspect. A client who is an employee of a national telephone business regularly donates to something similar, and they definitely have the Section 501(c)(3) stuff in order for that type of activity.

Of course, if the employee was deemed never to have received the "donated" pay in the first place, then things likely get a bit more confusing.

FE

[Burke]

A postal worker donates 2 days of his holiday pay to other postal works who are in financial need. The donation is done through a department with the USPS. From what I understand based on what the postal worker (my client) explains, it is a program sponsored by the USPS to let postal workers help their fellow postal employees in need.

Is it a tax deductible donation?

If they have set up a tax-exempt foundation for this purpose or have otherwise gotten a ruling from the IRS regarding deductibility, they should be able to tell the employee.

[Gretel]

I've heard of these plans somewhere and in accounting for the two days, the donor's w2 simply reflects 2 days less pay. So not a question of a deduction, rather less taxable pay.

Seems like this is a wash if deemed to be qualified contribution. Add to W-2 and then get deduction for donation, which of course is not what employee and employer would want. Probably recipient has to pay payroll taxes?

If, and when you find out, I am interested in the result.

[RitaB]

Agree

I did not see any mention of labor in the original post.

If the funds being donated are somehow going to a qualifying (even if internal) agency, I see no problem taking the deduction. My guess is something as large as the US Postal Service has already covered this aspect. A client who is an employee of a national telephone business regularly donates to something similar, and they definitely have the Section 501(c)(3) stuff in order for that type of activity.

Of course, if the employee was deemed never to have received the "donated" pay in the first place, then things likely get a bit more confusing.

FE

Yeah, if the employee was due pay which he donated to a non-profit, I see no problem with taking the deduction. In fact, I just had a client who donated about 40 hours of vacation pay to the Red Cross, had a nice letter from the employer showing how the total was calculated.

[taxea]

I did not see any mention of labor in the original post.

If the funds being donated are somehow going to a qualifying (even if internal) agency, I see no problem taking the deduction. My guess is something as large as the US Postal Service has already covered this aspect. A client who is an employee of a national telephone business regularly donates to something similar, and they definitely have the Section 501(c)(3) stuff in order for that type of activity.

Of course, if the employee was deemed never to have received the "donated" pay in the first place, then things likely get a bit more confusing.

FE

this is a common thing in several companies. they allow employees to "donate" there sick leave or vacation days to someone who is seriously ill and has used up their days. None of this is done through a non-profit, it is done through the payroll department. I would not deduct it.

Koss
I only mentioned labor in case the giving employees have chosen to work days off to cover the ill employees shift

[BP.]

Koss

Has Burton weighed in on this and I've missed it?

I'm also familiar with a plan where employees donate vacation or holiday hours to other employees in need. Simply doesn't show on payroll, as Harlan mentioned.

[AJsTax]

Where Is Their Basis?

I did not see any mention of labor in the original post.

If the funds being donated are somehow going to a qualifying (even if internal) agency, I see no problem taking the deduction. My guess is something as large as the US Postal Service has already covered this aspect. A client who is an employee of a national telephone business regularly donates to something similar, and they definitely have the Section 501(c)(3) stuff in order for that type of activity.

Of course, if the employee was deemed never to have received the "donated" pay in the first place, then things likely get a bit more confusing.

FE

they have no basis in the hours given to the other employee because they have not received it and paid taxes on it yet.
No basis, no deduction..quite a basic concept.

[Zee]

I don't believe the post office is a qualified charity. As such, it's not deductible.

[Gary2]

I don't believe the post office is a qualified charity. As such, it's not deductible.

Actually, the US Government, state governments, and their subdivisions do qualify, provided the donation is for a public purpose. I don't know if that carries over to the US Post Office (is it considered a government agency or quasi independent?) nor whether this particular type of donation would qualify.

[Zee]

Thanks...you're correct. I should know that.

I believe, however, these deductions are vacation hours earned and the beneficiary is limited to other postal workers who have an illness or situation requiring time off. Generally, employees are encouraged to donated "use it or lose it" earned vacation hours (or other hours) and it also allows them to participate in the program as a beneficiary.

I think the poster needs to learn more about the program. But, on the surface, I do not believe this is a deductible charitable contribution. And, how would you deduct vacation hours?

Here's a link to an article on the taxation of "shared leave" programs, if anyone is interested:

http://barley.com/publications/article.cfm?Article_ID=251

[AJsTax]

Not a deduction

My other post on this got lost above in the shuffle, so I will restate the position in another way.
In order to have a charitable deduction you must be giving up without restraint something that you purchased with money you paid income taxes on. Or the cash that you have that you paid taxes on. Just like when you make a direct contribution from an IRA to a charity do you also get a charitable deduction? NO. you just make that income non taxable.
The employee has not received the vacation or sick pay yet so it is not taxable to them yet. When the other employee receives the GIFT of the hours they will pay income taxes on it just as if they earned it.
No basis in the gift, no deduction. Also a gift to a person is only a gift, not a charitable donation.