If you are wondering about which expenses are covered under commuter benefits, we’ve got some answers.
First, here’s a brief explanation of how it works.
How Pre-Tax Commuter Benefits Work
Employers sign up to give commuter benefits to their employees. Commuter benefits allow employees to set aside pre tax dollars in their paychecks for their commuting costs.
The company saves because it pays less in payroll taxes, and the savings increase with each employee who takes advantage of the program. For example, a company can save up to $41 per month per employee. If you had 50 employees take advantage of commuter benefits every month for 12 months, you could save as much as $24,000.
Employees also save up to 40 percent in payroll costs because they can set aside a maximum of $265 per month from their paychecks to pay for commuting.
Which eligible expenses can be covered by commuter benefits?
So what can an employee do with all that money set aside every month? There are a lot of options. Some local commuter benefits ordinances may vary slightly, but here the main options for employees. Here are all the options you can take advantage of:
- Bike maintenance and repairs
Public transportation. Parking and Ridesharing: what do you need to know
If you need to take public transportation to work, chances are commuter benefits can benefit you because in most cities, and some rural areas, there is a bus system for the area.
While not everyone can take a subway or train, for example, you can use commuter benefits if you drive.
Drivers are allowed to use it for qualified parking. According to the IRS guidelines for fringe benefits, qualified parking is parking you provide to your employees on or near your business premises. It includes parking on or near the location from which your employees commute to work using mass transit, commuter highway vehicles, or carpools.”
If you want to learn more about commuter benefits, download the 101 Guide.