Tax-free Transit Benefits
Tax Free Transit Benefit Increase for 2009 Commuters have something to be excited about as the American Recovery & Reinvestment ACT of 2009 will provide a bundle of savings for transit and vanpool riders. The new stimulus bill, signed into law on February 17 by President Obama, included a provision that will increase the monthly pre-tax transit and vanpool benefit amount allowable to employees by their employers. The enactment of the bill will raise the IRS-qualified transportation fringe benefit for transit and vanpool [IRC 132 (f)] to match that of the currently allowable pre-tax amount for parking. As of February 17, 2009, employers can provide employees with up to $230 in pre-tax dollars for transit and vanpool use to and from the worksite. The new act nearly doubles the 2009 tax-free transit and vanpool benefit amount from January 1, 2009, which set the limit at $120. The new provision is set to expire on January 1, 2011, although it is expected that Congress will make the increase permanent. If you already offer a tax-free transit benefit but would like assistance in encouraging employee participation, ATP can create marketing materials for you to distribute, host workshops or lunch-and-learns, and visit your worksite for an open enrollment fair.Contact us today to get started, 703-247-9299 or solutions@commuterpage.com. Qualified Transportation Fringe Benefits | 2008 | 2009 | Beginning
February 17, 2009 | | Transit and Vanpools | $115 | $120 | $230 | | Parking | $220 | $230 | $230 | | Bicycle | N/A | $20 | $20 |
What are tax free transit benefits?
What are the benefits of tax-free transit benefits?
How ATP helps
How can I encourage employee participation?
Online resources
 What are tax-free transit benefits?
As we hear every day in the media, transportation is a growing problem in the Washington region. Did you know that it is also a major consideration for potential employees when deciding whether to accept job offers? You can make that decision easier by adding a tax-free transit benefit to your benefits package.
Tax-free transit benefits allow employers to provide employees up to $230 per month ($2760 per year) to cover the cost of commuting on Metrorail, VRE, MARC, local and commuter buses, and vanpools. The best part is, unlike ordinary wage payments, employers do not have to pay their share of federal payroll taxes on tax-free transit benefits, and the cost of providing the benefit can be deducted as a normal business expense.
Tax-free transit benefits can be implemented either through a CommuterDirect.com® Corporate Services Account or through the Washington Metropolitan Area Transit Authority.
There are three options for offering tax-free transit benefits to your employees: - Employer contribution
- Pre-tax deduction from the employee's paycheck
- Combination of pre-tax deduction and direct benefit
Employer contribution is the most favorable to your employees, but, if that's not an option for your company, a pre-tax payroll deduction is still beneficial to both you and your employees. You will actually save approximately $211 a year in payroll taxes per participating employee, and your employees will save 15% to 42% of their monthly commuting costs, depending upon their individual tax brackets.
NOTE: There is an additional transit benefit employers can provide their employees, called a cash transit benefit. Instead of providing a tax-free transit benefit through the Metrochek system or CommuterDirect.com Corporate Services, the employer simply gives the employee cash. This is not a tax-free transit benefit (the cash is considered taxable income), but can be combined with tax-free transit benefits.
Return to top
What are the benefits of tax-free transit benefits?
Offering $230 in tax-free transit benefits each month lets your employees know that you want them to have easier, cheaper, and less stressful commutes to work. It also helps make your business more competitive in recruiting and retaining employees.
"We're doing this because there clearly is a need, and it is in the best interest of our company."
"The cost of Metrochek is insignificant compared to the benefits."
"It expands our labor pool. There are many employees who could not work here without it. I observe employees who take rail or HOV as being much less stressed. They put in a longer, more productive day."
-PricewaterhouseCoopers
Return to top
How ATP helps:
ATP makes it easy and convenient for you to establish and administer a program that meets the IRS requirements for tax-free transportation benefits. Ways in which ATP can help include: - Providing information on tax-free transit benefits and answering any questions
- Explaining implementation choices
- Helping you choose the best program option for your needs
- Guiding you step-by-step through the implementation process, which includes:
- Establishing an account
- Open enrollment
- Promotion of the program
- Following-up to ensure success
- Keeping you up-to-date on any changes in the tax law
- Providing samples of:
- The IRS tax code
- Promotional e-mails
- Enrollment forms
- Transit information
- Open enrollment events to employees
- Sponsoring a workshop or seminar to explain tax-free transit benefits
Return to top
How can I encourage employee participation?
There are numerous ways you can get the word out and encourage employee participation in a tax-free transit benefit program, including: - Sending out e-mail notifications and reminders
- Displaying posters and flyers in high-traffic areas of your office
- Including information packets with paychecks
- Including an article in your company newsletter
- Providing information on your company's intranet
- Including information in your new hire packets
Return to top
Online resources:
Local Commuter Stores to exchange Metrochecks
Return to top
|
