When you make a charitable donation of cash, you get a tax deduction to undo the income tax you paid when you originally got that cash. If a company directly donates to charity, you don't pay income tax on that money in the first place, so you don't need a deduction to undo it.

The end result is the same $0 net change in your bank account balance.

Also, companies can deduct all expenses from corporate income tax. So if a company pays you money via payroll, or pays that money directly to a charity,t he company will deduct it from corporate income tax either way.

The benefit of a company making charitable donations directly is that payroll taxes are avoided (not to be confused with income taxes). Both the employee and the company benefit from this, because normally both the employee and the company pay payroll taxes.

If I recall correctly, the employees just picked a charity and Google gave the donation. The "gift" was being able to pick the charity. I don't think there was any employee tax break.

Well the employee doesn't have to pay income tax or payroll tax on the money, so in that sense there is a tax break compared to if the money was given to the employee.

Not a tax break for the employee, since the net effect is still less money. Unless you consider losing your job and having no salary to tax also a tax break.

It’s not “still less money” compared with the situation where the employee gets the money AND donates the money. Of course if the employee was not going to keep the money not getting it is a net loss.

People were mainly just annoyed that rather than getting a free phone or some cash as a gift, they instead got the ability to choose a charity to receive a donation from Google (which has "value" but not monetary or physical value to the employee). The expected to receive a phone/cash so it felt like less compensation/bonus when they didn't receive it.

I doubt anyone was thinking about donation related tax breaks or anything like that. It was simply "sure I will have Google give $500 to this food bank, but why don't I get a new phone or cash bonus?"

Yeah, it depends on what situation you're comparing against.

If you're comparing against the employee getting a gift and keeping it, then yes, the employee was better off before.

But you're comparing against an employee who was previously donating the gift and getting a tax deduction on that donation, the employee is better off now.

Obliquely relevant question: can U.S. sole proprietors make expensed charitable contributions? I'm guessing not, because that would decrease the 13.5% Social Security "contribution", and would be on top of the "standard deduction" that was increased to make Schedule A itemization preferable only in exceptional cases.

I don't know anything about sole trader taxation but corporations can make charitable donations that are treated as business expenses (hence not taxed). They pretty much have to be cash, not in-kind contributions though. Ianaa, etc.

They didn’t share the details but most likely the company. The donation was “on behalf of all employees”

It should be a wash either way unless someone falls into some weird edge case where deductions are limited. The corporation is deducting the payment either way, either as comp paid out to employees or as a charitable donation directly.

That’s probably correct but previously they were also paying your taxes on the gift for you (i know). Since they didn’t share all the details it was hard to figure out if how it played out financially.

I didn’t have a dog in that race bc I couldn’t stand android so I wasn’t even claiming my gift previously but it was interesting to watch the political pickle they got themselves in

If it is a thousand dollar donation, what am I going to do with the tax break? I still have to take a standard deduction. What am I missing?

Majority of goog employees were making high salary in California so very few people in head office were taking standard deduction especially before trumps tax changes

You didn’t get the deduction. It was just a way to direct company funds.

Charity is an above the line deduction.

No it's not. $300 can be an above-the-line deduction. Any donation beyond that is below the line.

https://www.aarp.org/money/taxes/info-2020/how-to-deduct-202...

It wasn't last year, now it is again, so people might've missed it. I thought you could only deduct $300 though.

Yes, it's limited to $300. So it's not very useful for people significantly more than that but still below the standard deduction.

Are you talking about California state tax? The $300 thing doesn't jive with my federal tax spreadsheet..

No, we're talking federally. There's a $300 federal above-the-line charitable deduction. Everything after that is below the line.

https://www.aarp.org/money/taxes/info-2020/how-to-deduct-202...