A PTO donation form is the written authorization your employer uses to move a set number of hours from your paid leave balance to a coworker facing a medical emergency or a major disaster, or into a shared leave bank. The form itself is usually one page, but a few fields carry real weight, and the tax outcome depends on your employer having a qualifying written plan behind it. When the plan qualifies under IRS rules, you owe no income tax on the hours you give away.1Internal Revenue Service. Leave Sharing Plans Frequently Asked Questions
What the Form Asks You to Provide
Expect to fill in your full name, employee ID, and the exact number of hours you want to donate. The hour count cannot exceed your current available balance, and many employers require you to keep a minimum number of hours in reserve after the transfer. You’ll also indicate whether the hours go to a named coworker or into a general leave bank the employer distributes.
There’s a signature line and a date. Your signature confirms the donation is voluntary, which is one of the legal conditions for the favorable tax treatment. Most forms state that the donation is irrevocable once processed, so the hours will not come back to your balance. If your employer’s plan covers both medical emergencies and disaster relief, the form may ask which category you’re donating under.
How Much You Can Donate
Employers set caps, and the cap depends on the type of plan. For disaster leave-sharing plans, IRS guidance says you cannot donate more than the total leave you’d normally accrue in a year.2Internal Revenue Service. Notice 2006-59 – Amounts Paid Pursuant to a Leave-Sharing Plan to Assist Employees Affected by a Major Disaster Medical emergency plans must also specify donation limits, but the IRS leaves the exact numbers to the employer.
Beyond the annual ceiling, most employers require donors to hold a minimum balance after giving. The specific floor varies. Federal employees follow a stricter rule under the Voluntary Leave Transfer Program: they can donate no more than half of the annual leave they’d accrue in the given year.3U.S. Office of Personnel Management. Fact Sheet: Voluntary Leave Transfer Program Check your employer’s policy before you write a number on the form.
Who Can Receive the Hours
Donated leave doesn’t go to anyone who wants extra time off. Under IRS guidelines, a recipient qualifies under a medical emergency plan when they have a medical condition, their own or a family member’s, serious enough to require a prolonged absence, and they’ll suffer a substantial loss of income because they’ve used up their other paid leave. The recipient must exhaust their own accrued leave before drawing on donated hours.2Internal Revenue Service. Notice 2006-59 – Amounts Paid Pursuant to a Leave-Sharing Plan to Assist Employees Affected by a Major Disaster
Recipients apply separately, in writing, describing their need. The employer reviews and approves or denies it. Disaster leave sits in an employer-sponsored bank and can only be used by employees adversely affected by the specific presidentially declared disaster that triggered the plan. If any donated disaster leave is still in the bank when the employer’s time window closes, it goes back to donors proportionally, one of the few exceptions to the general rule that donations are irrevocable.2Internal Revenue Service. Notice 2006-59 – Amounts Paid Pursuant to a Leave-Sharing Plan to Assist Employees Affected by a Major Disaster
How to Submit It
Most organizations post the form on an internal HR portal or in the employee handbook. Once signed, you typically upload it in an HR system or email a PDF to a designated benefits address. Some workplaces still take a paper form at the payroll office.
You should receive a confirmation that the request was received. Payroll then verifies your available balance and your minimum-balance requirement. If everything checks out, the hours come off your account and go either to the named recipient or into the employer’s bank. The transfer usually clears in one to two pay cycles, sometimes faster during an active disaster response.
What the Donation Means for Your Taxes
Under a qualifying leave-sharing plan, the donated hours are not taxed to you and do not appear as income on your W-2.1Internal Revenue Service. Leave Sharing Plans Frequently Asked Questions That’s the whole point of the IRS framework: without it, the hours you earned would still be taxable to you even after you gave them away.
You do not get a charitable deduction for the donation. The IRS states that donating leave under these plans produces no deductible expense or loss for the donor.4Internal Revenue Service. Internal Revenue Bulletin 2006-28 – Notice 2006-59 You’re giving up untaxed hours, so there’s nothing left to deduct.
What It Means for the Recipient
The recipient carries the tax. When they use donated leave, the employer pays them at their own regular rate and treats those payments as taxable wages, subject to federal income tax withholding, the 6.2% Social Security tax, and the 1.45% Medicare tax.5Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates The employer also owes federal unemployment tax at a 6.0% rate on the first $7,000 of the employee’s wages for the year.6Internal Revenue Service. Topic No. 759, Form 940 – Employers Annual Federal Unemployment (FUTA) Tax Return
In practice, donated leave shows up as ordinary paychecks with taxes withheld each pay period. Recipients should check pay stubs to confirm withholding is happening when donated hours are used; catching an under-withholding problem during the year is easier than fixing it at tax time.
Confirm the Employer Has a Written Plan Before You Sign
The favorable tax treatment depends on the plan meeting IRS requirements. Revenue Ruling 90-29 governs medical emergency plans and requires a written plan that defines a qualifying medical emergency, sets donation limits, and requires recipients to exhaust their own leave first. Notice 2006-59 governs major disaster plans and adds requirements around the employer’s bank, the time window for donations and use, and the return of unused hours.2Internal Revenue Service. Notice 2006-59 – Amounts Paid Pursuant to a Leave-Sharing Plan to Assist Employees Affected by a Major Disaster
If the arrangement doesn’t meet those requirements, the donated hours can be reclassified as taxable income to you under the assignment of income doctrine, meaning you’d owe tax on hours you gave away and never used, while the recipient may still be taxed on the same hours when paid. Before you sign, confirm your employer has a formal written policy on file. If HR can’t point to one, raise that before any hours transfer.