![]() ![]() That obligation opens up a great opportunity for businesses looking to offer the kind of perks that can attract top-tier employees. ![]() ![]() But generally gas, mileage costs, and even transit passes are the employee’s to pay in full. There are a few exceptions, such as occasions when the employee must commute to a temporary work site. Long ago the government decided that the nature and distance of an employee’s commute is determined by where the employee decides to live, which is a personal choice that shouldn’t earn a public subsidy. That reduces the taxable income of employees and the FICA (payroll) taxes employers must pay.Ĭommuter benefits are valuable because employees cannot deduct the cost of commuting to work. Section 132 of the Internal Revenue Code recognizes qualified transportation benefits as one of the eight “fringe benefits” that employees may exclude from their pre-tax income. What is a commuter benefits program?Ī commuter benefits program is provided by an employer to help their employees pay for the cost of transportation to work. Please speak to a qualified professional about any tax accounting questions you have. For companies in that position-and for those interested in starting a new program-we’ve put together a quick overview of what you need to know.Ībacus does not provide tax advice. ![]() Many organizations are seizing the occasion of this rule change to revisit the commuter benefits programs they have in place for their employees. Employers, however, may no longer deduct those contributions. Employees are still allowed to exclude employer-provided contributions for parking and transit passes from their taxable income, just as they could before. Late last year, the Tax Cuts and Jobs Act repealed that deduction. In 2018, the financial calculus has changed for organizations that want to help cover their employees’ commuting costs.įor the last twenty-five years, US companies have been allowed to claim a business expense deduction for qualified transportation benefits offered to employees. ![]()
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