By using pre-tax dollars to pay for transit expenses, employees can save money on their commute and reduce their taxable income. Commuting can result in high expenses, especially for those who live far away from their workplace. A commuter benefits program can provide tax-free benefits for transportation and parking, which can help employees save on their commuting costs. With these alternatives, employees can save money on transportation expenses and use those resources for other financial needs or to improve their quality of life. A commuter benefits program can bring significant savings for both the company and the employees. With more economical transportation options, such as carpooling or the use of public transportation, employees can save money on gas and vehicle maintenance.
- Depending on the dollar value and type of programs offered, employee transportation benefits may be provided in pre-tax or after-tax dollars.
- The answer to this question depends on the specific commuter benefits program.
- Commuter transit and parking accounts allow you to use pre-tax funds to pay for commuting costs.
But a company located in a smaller rural area may not offer that benefit if their employees generally drive to work — though they may offer a parking benefit. Commuting can be a time-consuming experience, particularly for employees who have long commutes. With https://turbo-tax.org/ these options, employees can feel less overwhelmed and have a better quality of life. Commuter benefits, also known as transportation benefits for employees, are programs offered by employers to help employees save money and improve their commuting experience.
Edenred Benefits offers two different programs guaranteed to fit your company’s needs and budget. Edenred’s Prepaid Card can be used at any compliant location that sells transit or parking items only. While an employee cannot use their Edenred card to purchase a transit pass at a local convenience store, they can use it to purchase a transit card at a transit vending machine. For commuters who travel just 20 miles daily for work, switching from single-car occupancy to public transit results in a reduction of 4,800 pounds of CO2 emissions per year.
Frequently asked questions about commuter benefits
Your employer sponsored plan may exclude reimbursement for certain categories of items. Check your plan document and summary plan description or contact your benefits department for specific coverage details. Eligible expenses include buses, trains, subways, ferries, vanpools and even shared ride services. If your plan includes parking, you can also pay for parking near your work or at your commuting lot. The money you spend on your work commuting expenses can be deducted from your paycheck pretax, within IRS limits. This means you can save up to $2,000 a year, depending on your tax situation.
What are eligible expenses for Commuter funds?
Because you’re not paying taxes on the money you contribute, you’re able to lower your taxable income and have more funds to use on eligible expenses. For employers and employees, benefits that qualify as transportation fringe benefits are not a part of an employee’s taxable wages. These commuter benefits are exempt from federal income and payroll taxes.
Flexible, Compliant, Handy, Savvy. What more could you want in a commuter benefits plan?
Nowadays, many professionals seek employers who offer benefits beyond salary, such as transit benefits, health plans, paid vacations, and wellness programs. An employee benefits program can be seen as an important benefit for many candidates and can influence the decision to accept a job offer. In addition, offering a benefits program can help increase the satisfaction of employees who already work in the company, reducing turnover. In addition, commuter benefits can help companies achieve their environmental sustainability goals while creating a healthier and happier workplace for their employees. Discounting or reimbursing the cost of transit passes can help employees who take public transportation to work. When a pre-tax commuter benefit plan is in place, employers and employees can contribute up to a combined $300 per month to pay for mass transit passes or fares.
Commuting is a major contributor to carbon emissions, which can have a negative impact on the environment. A commuter benefits program can offer sustainable transportation choices that encourage employees to reduce their carbon footprint, such as public transit or bike-sharing programs. By promoting environmentally friendly commuting options, companies can contribute to a more sustainable future and show their commitment to reducing their environmental impact.
HSA Bank Health Benefits Debit Card – Use your debit card at the point of sale for benefit providers like parking garages and transit stations. Check – If you don’t sign up for direct deposit, you get a paper check in the mail. Once HealthEquity is notified that you have left your employer, all future commuter elections not yet processed are canceled. Pay Me Back elections may be accessed after termination for 180 days after the end of the benefit month in which the expense was incurred. Commuter elections processed prior to your termination may still be fulfilled.
Members can view their order deadline by logging into their Commuter account and selecting the Parking or Transit tab. To avoid having to manually place an order every month, members can set up recurring orders for the month(s) that they would like to submit an order for. If this is your first order for a HealthEquity Commuter Card, the new card will be mailed to you prior to the first day of your first benefit month. A Commuter Parking Account is a pre-tax benefit account used to pay for parking as part of your daily commute to work. Brush up on this pre-tax benefit; the only benefit where employees and companies save. HSA Bank Health Benefits Debit Card – If you get a debit card with your plan, you may use it at point of sale or after you get a medical bill from your provider.
How to Use Your FSA, HRA and Commuter Benefits
You have six months following the end of the benefit month to file claims to be reimbursed from your Pay Me Back account for expenses incurred prior to your termination. Per IRS regulations, pre-tax funds cannot be refunded to you if you terminate. A Commuter Transit Account is a pre-tax benefit account used to pay for public transit—including train, subway, bus, ferry, or vanpool—as part of your daily commute to and from work. Even with the remote work revolution, plenty of people still travel daily to a job site or office. With transportation prices continuing to rise, commuter benefits are always welcomed.
Pre-tax commuter benefits plans allow employees to use their elective contributions to pay for eligible parking expenses or transit passes. Additionally, companies may choose to contribute funds to the plan on behalf of employees. For example, a company located in a large metropolitan area may provide public transportation benefits — as that may be the primary mode of transportation in a big city.
Contact your Paychex representative or reach out to learn more about employee commuter benefits. In addition to sponsoring a pre-tax commuter benefits plan, employers may also contribute funds to the plan on behalf of participating employees. However, the combined employee and employer contributions commuter transit benefit must not exceed the annual IRS limits. Companies and employees everywhere can reap the rewards of a pre-tax commuter benefits program. Social Security and Medicare taxes are employer and employee taxes, meaning you and the employee need to contribute a matching 7.65% of the employee’s wages.