Parking & Transit
What it is…
Internal Revenue Code Section 132 and the Transportation Equity Act for the 21st Century (TEA-21) allows you, the employer, to offer employees the opportunity to set aside a portion of their salary to pay for certain transportation expenses. The employee will not be taxed on the amounts that are set aside and used for qualified expenses. Qualified transportation expenses generally include payments for the use of mass transportation (i.e. train, subway, bus fares), and for parking. For 2016 the maximum monthly pre-tax contribution is $255 for mass transit and $255 for parking.
How it works…
Before the start of the plan year, employees elect to set aside a certain amount of pre-tax salary to cover qualified costs incurred in commuting to work. The employee will designate an amount (up to $255 per month for 2017) for mass transit expenses and a separate amount (up to $255 per month for 2017) for parking expenses—These accounts must be kept separate, and funds cannot be transferred between accounts As the employee incurs the expenses during the year, he or she may use the debit card (if applicable) or a request may be submitted for reimbursement. Any amounts remaining in the employee’s reimbursement account at the end of the plan year are carried forward to the next year.
To learn about using your pre-tax dollars to help pay for uberPOOL click HERE.