Good news from the IRS may be a rarity, but here it is: Helping employees impacted by Hurricane Sandy can be tax-free.
Shortly after Hurricane Sandy ended its ravaging of the northeast, the IRS announced that “disaster relief payments made to individuals by their employer or any person can be excluded from those individuals’ taxable income.”
This comes from 2001’s Victims of Terrorism Tax Relief Action, which added a section to the tax code allowing employers to make qualified disaster relief payments that are exempt from federal income tax and employment tax to employees.
Donations should be used to help with necessary personal, family, living or funeral expenses not covered by insurance. That includes repairing or rehabbing personal residences and its contents, whether the employee rents or owns property in need of repair.