How Do You Actually Get Commuter Benefits?
Bike to Work Day 2010 in San Francisco. Photo credit: Bay Area Fair Trade Coalition
In an earlier post here at 511 Contra Costa we noted that commuter benefits for vanpooling and public transportation had been restored through the American Taxpayer Relief Act of 2012 (HR 8) to be on par with the qualified parking benefit
- up to $245 per employee withholding per month for vanpool and all public transportation
- up to $245 per employee withholding per month for qualified parking, or
- up to $490 per employee withholding per month for both public transportation and qualified parking
This is great news but how does one go about setting aside pre-tax income for a commute benefit? Here are some steps you can take to get started.
First, make sure you’re using a qualifying commute alternative. The benefit is available to commuters who commute to work in a vanpool, use public transit, or pay for qualified parking. (Carpooling does not currently qualify for pre-tax benefits.)
Next, ask your employer if commuter tax benefits are offered; typically Human Resources or Benefits department will know. If your employer isn’t aware of the benefit, share the IRS Employer’s Tax Guide to Fringe Benefits with them.
Step three is to set up a payroll withholding for the qualified commute benefit you use. Keep in mind, your employer must have this benefit set up as a pre-tax withholding option in the payroll system.
There is also a benefit for commuting by bicycle though the process is slightly different because unlike other pre-tax commuter benefits the bicycle benefit cannot be withheld from your pay. See the full tax code here
Note: Withe the passage of California Senate Bill 1339, employers in the nine-county San Francisco Bay Are with 50 ore more employees will be required to offer some sort of commuter benefit – one of the options is to offer employees to withhold pre-tax income for vanpooling, transit or qualified parking. Look for more information on the roll-out of this bill in summer of 2013. The Bay Area Air Quality Management District and the Metropolitan Transportation Commission are developing the Rule.