IRS gives tax relief to Ebola victims

WASHINGTON — The Internal Revenue Service gave tax relief to victims of the Ebola crisis Wednesday, declaring that any money they receive for Ebola-related medical, funeral or quarantine expenses won't be taxable.

The tax agency also made it easier for employees to help fight the epidemic by contributing vacation time instead of cash.

The IRS notice designating Ebola as a "qualified disaster" is the fifth time the IRS has given such tax relief since 2008, including the Haiti earthquake in 2010 and the Japanese tsunami in 2011. But it's the first time the IRS has used the designation for a disease.

"The way I see this, even more than the medical expenses, it's the living expenses," said David Whaley, a tax and employee benefits lawyer in Cincinnati. "It's the quarantine expenses for somebody who's not sick but can't work because they're in quarantine for 21 days."

Ordinarily, if an employer or a charity helps with those expenses, that could be considered income to the quarantined person. "The IRS is basically saying, 'We don't care,'" Whaley said.

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In a second notice Wednesday, the IRS also allowed the use of leave-based donations to help in Ebola relief efforts.

The program works like this: An employee of a participating company donates unused vacation or leave time back to the employer, who converts it into cash and donates the money to a charity helping with the Ebola crisis.

Under the new guidance, the donation would be exempt from income and payroll taxes for both the employee and employer. Although the employee would not be able to take a charitable deduction, the IRS action means that taxpayers who don't itemize would get a tax benefit for their donation if made before Jan. 1, 2016.

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