Russia's invasion of Ukraine has triggered a worldwide outpouring of support for victims of the war. And aide to those suffering is not just coming from other nations. Ordinary citizens from around the world are helping, too. They're showing up in neighboring countries to help refugees, sending care packages, donating to relief organizations, giving blood, and more.
In the U.S., some companies are facilitating this effort by setting up leave-based donation programs. Under these programs, workers can give up their vacation, sick, or personal leave in exchange for having their employer make a cash donation to a charitable organization tied to Ukrainian relief efforts. However, one of the questions workers may have about participating in a leave-based donation program is whether their donation will be treated as taxable income on their W-2 form.
Fortunately, the IRS has cleared up this concern for leave-based programs set up to help victims of the war in Ukraine. According to the tax agency, payments made by an employer under such a leave-based donation program before January 1, 2023, won't be treated as gross income, wages, or compensation of their workers. As a result, employees who elect to forgo leave under a leave-based donation program to help Ukrainian war victims won't be treated as having constructively received gross income, wages, or compensation. That also means an employer shouldn't include the payments it makes to a charity under the program in Box 1, 3, or 5 of its electing employees' W-2 forms.
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However, to prevent "double dipping," workers who participate in a leave-based donation program can't claim a charitable contribution deduction on their 2022 tax return for the value of their forgone leave. On the other hand, the employer may be able to deduct its payments to charity if it otherwise meets the requirements for a charitable deduction.
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