Furlough pay as a charitable contribution

Forum|Forum|5 years ago
September 23, 2020
1 reply
12 views

A city is asking its employees to be furloughed, however, my client is in a classification that prohibits their pay to be reduced directly by 10%, therefore he will be paid in full and voluntarily contributing 10% of his pay to the city to participate in the furlough program. Can this contribution be deducted as a charitable deduction?

Lacerte Tax

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Best answer by sjrcpa

Does this letter say, due to your employment terms we will continue paying your full salary during this furlough and you will donate 10% back to us?

If yes, that's a quid pro quo and no charitable contribution.

T

TaxGuyBill

Level 15

@rosicamp wrote:
voluntarily contributing 10% of his pay to the city to participate in the furlough program.

Voluntarily contributing money to the city would be a charitable donation, BUT you said it was "to participate" in the program. So are they receiving a benefit from that contribution? Is that required to participate? If so, that probably reduces or eliminate the tax deduction.

What exactly is the benefit they are receiving (the "furlough program")?

R

rosicampAuthor

Level 2

The city will continue to pay him his full salary, and he will donate 10% back.

It's assumed his W-2 will show his full salary and will be taxed accordingly. Most of the city employees have agreed to some form of cutbacks through work hours or work pay. Because his salary is tied to retirement benefits the city is prohibited from reducing his salary to provide the budget relief.

The city is the one benefiting.

Since the letter he received does not indicate that the W-2 will indicate the reduction, my client is trying to balance out the taxes for income he will not receive by possibly deducting a charitable contribution.

sjrcpaAnswer

Level 15

Does this letter say, due to your employment terms we will continue paying your full salary during this furlough and you will donate 10% back to us?

If yes, that's a quid pro quo and no charitable contribution.

The more I know the more I don’t know.

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