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Employee Donations

Hello, We currently have an employee who was diagnosed with cancer and has been off work for 3 months; we do not have a return to work date. We have had other employees ask if they can donate part of their paycheck to him through an automatic payroll deduction as this situation is causing he and his family severe financial hardship. 1. Are the funds donated by the employee taxable to the donating employee? (I'm assuming yes, but just want to confirm) 2. Are the funds donated taxable to the receiving employee? 3. How do we pay those funds to the receiving employee? (Payroll vs. A/P) On to the second part of this topic, which I find quite sensitive. What is your company policy or past practices regarding a terminally ill employee? Do you keep them on staff indefinitely or terminate after a specified period of time? Just as an fyi, we are a local government employer in MI. Thank you for your assistance.

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  1. Dawn Stephans

    Feb. 16, 2016

    This is a new topic for me because we, when we do have a donation drive like this it is usually employees giving up a vacation day and then it is paid to the receiving employee and taxed accordingly. The donor just has their vacation allowance docked by said hours. My "gut" tells me that it would NOT be taxable to the recipient since it has already been taxed by the receiving employee. You are just the avenue to get it to the employee. I'm not sure whether it makes a difference to pay it using A/P or a non-taxable item in the payroll system either. Our A/P is very hesitant to set up an employee in their system so it would most likely come through payroll for us. Again, this is just my opinion, based on what payroll knowledge I have. Hopefully others will chime in.


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