While the COVID-19 pandemic is slowly subsiding, there are still new cases every week. Many charitable organizations continue to provide relief services to COVID-19 patients and their families. In 2020, the IRS authorized a program to encourage gifts to organizations providing COVID relief services. Employees of companies could donate their sick, vacation or personal leave days to a qualified charity providing relief services.
After the days were transferred, employers were permitted to make cash payments to the charities in exchange for the sick, vacation or personal leave days. The gift was not treated as income to the employee, but because he or she did not report it as income, there also was no income tax deduction. It was merely an opportunity for the employee to make a gift to assist individuals who were served by these nonprofits.
COVID is still affecting individuals in 2021. Therefore, the Internal Revenue Service extended the leave-donation program for this year. If employees give 2021 sick, vacation, or personal leave days to qualified nonprofits, the employers will have a deductible payment for the cash amount to charity and the nonprofit may then use the cash gifts to provide needed services to COVID-19 patients and their families.