Overview: Many employers provide commuter benefits to soften the blow of the high cost of commuting and to help recruit and/or retain valuable employees. This voluntary employee benefit program allows employees to reduce their monthly commuting expenses related to parking, transit, vanpooling and bicycling. Money used for eligible commuting expenses is excluded from gross income, and in many states, can also be excluded from state and local taxes.
Tax-free commuter benefits can be funded by:
In addition to helping with recruitment and retention, some employers provide transportation benefits for environmental and societal reasons. Driving to and from work on a regular basis takes a toll on the environment, traffic congestion and air quality. Offering commuter benefits may encourage workers to commute by mass transportation which, in turn, may reduce the number of commuters in cars, alleviate traffic jams, smog and damage to the environment.
Author: Tracy Morley, SPHR, Legal Editor
The IRS has issued special administrative procedures allowing employers to correct the retroactive increase in the maximum excludable amount for 2012 qualified transit benefits on fourth quarter Form 941 and Form W-2.
XpertHR has updated its payroll content to reflect 2013 inflation adjustments in amounts for excludable transportation fringe benefits, adoption assistance benefits, the standard deduction and personal exemption.
HR guidance on the benefits of providing commuter/transportation benefits.