united-states tax-law corporate-tax-laws
Is my company donating money to charity in lieu of paying me salary legal?
<p>I currently donate most of my money to charity, and knowing this my company has offered that they could deduce my salary and instead pay that money directly to charity.</p>
<p>I posted a <a href="https://money.stackexchange.com/questions/146088/would-allowing-my-company-to-pay-me-less-in-order-to-donate-that-money-to-charit">question</a> to the finances board asking rather this would be a net gain to charity, and almost immediately someone suggested that this may constitute tax evasion and be illegal.  I wouldn't think my company would screw up by accidentally offering to do something that was illegal.</p>
<p>So would allowing my company to donate money to a charity I choose in lieu of a salary increase be legal for me and my company.</p>

<p>The company pays you a salary A. They need to withhold some amount B of that to give to the IRS.</p>
<p>Now, if they pay you only C and withhold amount D that is based on that amount, and then make a separate tax-deductible donation E, that means the IRS does get not only an amount D that is smaller than B, but also the company can deduct E (in part) from their own taxes. As a result, that sounds like tax evasion on the face.</p>
<p>However, if they still pay you A, withhold B (the tax on the whole amount), and payout C to you as well as the donation as part of your salary, that could possibly be a legal way - though you might want to consult your tax consultant.</p>

<p>If your company wants to give money to charity, that is completely legal and not tax evasion.</p>
<p>Let's simplify this. The company offers you a salary increase, which you  decline. The company then donates the same amount of money to charity. In accounting terms, these are completely separate transactions. You are directly involved in the former, but are not directly involved in the latter.</p>
<p>At best, you are simply an advisor on the amount and recipient of the company's charitable donation. As long as the company gives the money directly to the charity, you are otherwise not involved.</p>
