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Transit and Vanpool Commuter Benefits to be Reduced in 2014

Fireworks in Pinole, CA in Contra Costa CountyTransit riders and vanpoolers who take advantage of pre-tax commuter benefits with their employer will find that their maximum monthly limit decrease to $130 starting January 1, 2014 from $245 in 2013.
The American Taxpayer Relief Act of 2012 (HR 8) restored the pre-tax transit and vanpool commuter benefits to be on par with the qualified parking benefit temporarily for the 2013 calendar year. That parity ends December 31, 2013.
At this time, the 2014 monthly limits for qualified monthly transportation benefits are:

  • up to $130 per employee per month for public transportation and vanpool
  • up to $250 per employee per month for qualified parking, or
  • up to $380 per employee per month for both public transportation and qualified parking

Qualified bicycle commuting reimbursements will remain unchanged at $20 per month in the new year.
Congress will have to pass legislation to make any changes to the 2014 transit and vanpool limits.
See the IRS Bulletin regarding the new monthly limits.
For more information about Transportation Fringe Benefits, visit the Internal Revenue Code Section 132 (F), as amended by TEA-21, Title IX, Section 910.

How Do You Actually Get Commuter Benefits?

Bike to Work Day at the Mid Market Energizer Station
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

For the 2013 calendar year:

  • 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.
 

Commuter Benefits Raised for 2013

6629120915_556a318093_zThe American Taxpayer Relief Act of 2012 (HR 8) has restored the pre-tax transit and vanpool commuter benefits to be on par with the qualified parking benefit. For the 2013 calendar year:

  • up to $245 per employee per month for vanpool and all public transportation
  • up to $245 per employee per month for qualified parking, or
  • up to $490 per employee per month for both public transportation and qualified parking

The effective date for the revised limits above allows for retroactivity back to January 1, 2012 if an employer so chooses under Sec. 203.
In 2012, the IRS Transportation (Commuting) Benefits rolled back to pre-2009 levels of $125 per month (adjusted for inflation) for vanpool expenses and public transit passes. The maximum was temporarily raised to $230 per month under The American Recovery and Reinvestment Act (ARRA) of 2009 and extended under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 to equal the monthly qualified commuter parking limit.
Qualified bicycle commuting reimbursements will remain unchanged at $20 per month in the new year.
By offering pre-tax commute benefits to employees, employers can save on paying FICA payroll taxes  and employees can take advantage of saving on federal withholding and FICA taxes on the amount deducted. Find out more from these third-party commute benefit administrators: Benefit Resource Inc., Clipper Direct, TranBen, TransitCenter (TransitChek), and WageWorks.

Image Credit: 401(K) 2013

New Limits on Commute Benefits in 2012

Heads up! The IRS Transportation (Commuting) Benefits are set to roll back to pre-2009 levels of $125 per month (adjusted for inflation) for public transit passes and vanpool expenses beginning January 1, 2012. The maximum was temporarily raised to $230 per month under The American Recovery and Reinvestment Act (ARRA) of 2009 and extended under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 to equal the monthly qualified commuter parking limit.
Qualified commuter parking expenses will increase up to $240 per month and qualified bicycle commuting reimbursements will remain unchanged at $20 per month in the new year.
By offering pre-tax commute benefits to employees, employers can save on paying FICA payroll taxes  and employees can take advantage of saving on federal withholding and FICA taxes on the amount deducted. Find out more from these third-party commute benefit administrators: Benefit Resource Inc., Clipper Direct, Edenred USA (Commuter Check), TranBen, TransitCenter (TransitChek), and WageWorks.
Image credit: 401K (Flickr)