Tax-Free Transit Expenses

As the price of gasoline continues to rise, wouldn’t it be great to offer a tax-free alternative to paying high prices at the pump?  A Section 132 Qualified Transportation Plan can do just that.  Eligible Transportation expenses include:

1. “Transit Pass Expenses” are defined as expenses incurred for a pass, token, fare card, voucher, or similar item for transportation (a) on mass transit facilities, whether or not publicly owned, or (b) provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle with a seating capacity of at least six adults (excluding the driver).  Mass transit facilities include: bus, ferry, train, subway, monorail, streetcars, and light rails.  Bridge Tolls are not eligible expenses.

2. “Commuter Highway Vehicle (Vanpool) Expenses” are defined as expenses incurred for work-related transportation in a “commuter highway vehicle”.  A Commuter Highway Vehicle is any highway vehicle with a seating capacity of at least six adults (not including the driver), and for which at least 80% of the mileage is for transporting employees between their residences and their places of employment, and on trips during which the number of employees transported for such purposes is, on average, at least half of the adult seating capacity of the vehicle (not including the driver). Expenses for rental cars such as Zipcar and City CarShare do not qualify.

3. “Parking Expenses” are defined as those expenses incurred to park a car on or near the business premises of the employer or expenses incurred to park a car at a location from which the employee commutes to work by (a) mass transit facilities, (b) a Commuter Highway Vehicle, (c) or carpool.

These expenses can be deducted from employee’s paychecks pre-tax and unlike flex plan contributions, the contributions can be carried over from one year to the next so there is no “use-it-or-lose it” policy.  So now is the time to “Go Green” by offering a Qualified Transportation Plan and save taxes too!  Please contact INNOVA BENEFIT Services to learn about how to set up the program.