Transit & Parking
Employees use tax-free dollars to pay for their commute by bus, rail, or ferry and any parking near these commuter stations or their workplace.
What is a commuter account?
A commuter account is an employer-sponsored benefit program that allows an employee to set aside pre-tax funds in separate accounts to pay for qualified mass transit and parking expenses associated with their commute to work.
Eligible expenses include:
Employees get reimbursed for transit passes, tokens, fare cards, vouchers, or similar items entitling the employee to ride a mass transit vehicle to or from work. The mass transit vehicle may be publicly or privately operated and includes bus, rail, or ferry.
Van-pooling is not to be confused with carpooling. Van-pooling requires a commuter highway vehicle with a seating capacity of a least 7 adults, including the driver. At least 80 percent of the vehicle mileage must be for transporting employees between their homes and workplace, with employees occupying at least one-half of the vehicle's seats (not including the driver's seat).
Employees get reimbursed for parking expenses incurred at or near their work location or a location from which they continue their commute to work by car pool, van-pool, or mass transit. Out-of-pocket parking fees for parking meters, garages and lots qualify. Parking at or near their home is not an eligible expense.
Why enroll in transit or parking?
Mass transit has always been eco-friendly and a great way to get some work done on the commute, but there is a new reason to get excited about the commute. Participating in a commuter account puts money back into the employee's wallet. Contributions to a commuter account are free from federal and state income, Social Security, and Medicare taxes and remain tax-free when it is reimbursed for eligible expenses. If an employee pays for mass transit, van-pooling, or parking on their commute to work, they'll want to take advantage of the savings this plan offers.
How much can an employee contribute?
Monthly limits are set by the IRS. For 2016, contributions for transit and van-pooling are limited to $255 per month. Parking contributions are limited to $255 per month. The monthly balances are carried forward and adjustments can be made to the contribution, join, or terminate plan participation at any time.
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