Transcripts

"Money File"-The Vacation Time Donation Program

SUSIE GHARIB: In the "money file" tonight, a way to help those hurt by the damage done by hurricane Katrina that won`t cost you a penny. Here`s Kathy Kristof, business writer for the "Los Angeles Times" and author of "Investing 101."

KATHY KRISTOF, AUTHOR, "INVESTING 101": Normally, people who don`t itemize deductions can`t enjoy tax benefits for giving to charity. But, a program that the IRS kicked off last week creates an exception to that rule. The IRS approved a temporary regulation that would allow companies to create "leave-based donation programs" to provide help for hurricane victims. These programs would allow employees to essentially give away their accrued vacation time. The company in turn provides a check for the value of the vacation days to a relief organization. The donated time could be spare hours that the employee had banked or it could simply be time that they won`t take in the future. Neither the company nor the worker pays tax on the value of the paid time off and that provides tax benefits to everyone. There is just one catch: employees may have to convince their companies to go along with the program. That`s because there are significant administrative challenges associated with cashing out a worker`s vacation days. Nonetheless, some employer groups say that they`ll seriously consider doing anything they can to help. And the IRS is giving companies until the end of 2006 to adopt a program because the agency believes displaced hurricane victims may need help for a very long time. So if you like the idea, it`s worth asking your benefits department whether this is or soon will be an option. I`m Kathy Kristof.