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Employee bonus donated back to organization

  • 1.  Employee bonus donated back to organization

    Posted 21 days ago
    Looking for guidance on how to account for an employee of an organization who is interested in "donating" back a bonus he received from the same institution.  Is there a preferred means/process of making this happen? Should the organization pay the bonus, then the employee donate it back, or can the funds just be transferred between accounts?

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    Jana Hunt
    Assistant Director Gift Recording
    Gannon University
    hunt001@gannon.edu
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  • 2.  RE: Employee bonus donated back to organization

    Posted 21 days ago

    Hi Jana,

     

    Have you talked to your payroll dept.? I'd be amazed if they were on board with doing anything other than paying the employee normally. There are all kinds of employment tax considerations, I imagine.

     

    ––––––––––––––

    Bill Wong
    Manager of Giving Operations
    Savannah College of Art and Design ®


    office: 404.253.6081
    wswong@scad.edu / www.scad.edu

    SCAD40: Forty Creative Years


    SCAD: The University for Creative Careers ®
    NOTICE: This e-mail message and all attachments transmitted with it may contain legally privileged and confidential information intended solely for the use of the addressee. If the reader of this message is not the intended recipient, you are hereby notified that any reading, dissemination, distribution, copying, or other use of this message or its attachments is strictly prohibited. If you have received this message in error, please notify the sender immediately by telephone or by electronic mail and then delete this message and all copies and backups thereof. Thank you.

     

     






  • 3.  RE: Employee bonus donated back to organization

    Posted 21 days ago

    I just re-read and maybe you are talking about an outside employee? Not one of your own....? In that case, his payroll isn't likely to agree to anything but paying him normally.

     

    ––––––––––––––

    Bill Wong
    Manager of Giving Operations
    Savannah College of Art and Design ®


    office: 404.253.6081
    wswong@scad.edu / www.scad.edu

    SCAD40: Forty Creative Years


    SCAD: The University for Creative Careers ®
    NOTICE: This e-mail message and all attachments transmitted with it may contain legally privileged and confidential information intended solely for the use of the addressee. If the reader of this message is not the intended recipient, you are hereby notified that any reading, dissemination, distribution, copying, or other use of this message or its attachments is strictly prohibited. If you have received this message in error, please notify the sender immediately by telephone or by electronic mail and then delete this message and all copies and backups thereof. Thank you.

     

     






  • 4.  RE: Employee bonus donated back to organization

    Posted 21 days ago
    Yes.  The bonus should be paid out and then a check written back.  In fact due to tax requirements that probably ends up being the easiest option.

    John Taylor
    919.816.5903

    Big ideas; small keyboard





  • 5.  RE: Employee bonus donated back to organization

    Posted 21 days ago

    Hmmm.  I would think that the key distinction is whether the money that you receive belongs to the employee.  If the organization includes the money in the employee's income (if the money is recorded on the Form W-2 provided to the employee, for instance, or at least if the money is recorded in the payroll system so that it will be included on the employee's W-2), that would make clear that it's the employee's money.  Then it wouldn't matter how the money makes its way to a gift account.

     

    After all, if my employer pays me and then, at my request, makes a payroll deduction to support a charitable organization, that's still my money, even though I didn't deposit the money and write a check myself.

     

    This will largely be governed by what your payroll office is set up to handle.  It's also worth noting that the employees would still be responsible for all payroll and income taxes on this income, in the usual way (although the employee may get an offsetting income tax deduction, if their circumstances allow them to itemize deductions).

     

    I have sometimes seen an arrangement where an employee and their charitable employer agree that, rather than pay the employee a bonus or pay a contractor to teach a course or whatever, the employer will contribute an equivalent amount to one gift account or another.  In that case, it's not/never the employee's money, so it's not the employee's gift (although you might recognize them for their generosity, and, on the plus side, the employee doesn't have any tax liability, since, again, it's never their money).  Whether that's an option would depend on what policies your organization has around employment and what processes you payroll office is set up to handle.

     

    My US$0.02 worth; the usual disclaimers apply.

     

    Good luck!

     

    Alan

     

    Alan S. Hejnal   

    Data Quality Manager

    Smithsonian Institution - Office of Advancement

    600 Maryland Ave SW Ste 600E

    PO Box 37012, MRC 527

    Washington, DC 20013-7012

    Voice: 202-633-8754 | Email: HejnalA@si.edu                                                                                                                                            

    SNAGHTML5cbfa34                                                                                                                            

     

     






  • 6.  RE: Employee bonus donated back to organization

    Posted 21 days ago
    I aree with what Alan and others are saying. Basically if the person receiving the bonus is not paying taxes on it, then it is never really their money. Therefore they cannot claim a tax deduction on money they were never taxed on. We will however give them recognition credit (soft credit) for whatever that is worth. It is a nice gesture on the employees part. So it is worth thanking them.

    K. Harvey Summers
    Gift Income Coordinator
    A.T. Still University of Health Sciences
    800 W Jefferson
    Kirksville MO 63501
    Phone: 660-626-2511
    Toll Free: 866-626-2878 x2180

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    K. Summers
    Gift Income Coordinator
    A.T. Sill University (ATSU)
    ksummers@atsu.edu
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