IRS Commuter Benefits

As a result of the American Taxpayer Relief Act of 2012 (HR 8), Federal law allows employers three ways to reduce the cost of commuting via public transportation (bus, train, ferry or registered vanpool) or qualified parking for employees. Companies can offer employees:

1.             a tax-free employer-paid subsidy

2.             a pre-tax employee-paid payroll deduction, or

3.             a combination of the above (shared employee- employer-paid)

Tax-exempt and pre-tax limits are set by the IRS. The following are the limits for the 2013 tax year, but the effective date may allow for retroactivity back to January 1, 2012 if an employer so chooses:

  • $240 per employee per month for vanpool, bus, ferry, rail (all public transportation)
  • $240 per employee per month for qualified parking, or
  • $480 per month per employee for both public transportation and qualified parking.

When the employee pays part or all of the cost of public transportation via a pre-tax payroll deduction, the employee can set aside up to $240 a month of pre-tax income. The employee saves federal withholding and FICA payroll taxes on the amount deducted. The employer saves paying FICA on the amount deducted. Employees may also share the cost with employers using after tax income. Pre-tax payroll deductions are referenced in the Internal Revenue Code, Section 132(F), as amended by TEA-21, Title IX, Section 910.

Annual Labor & Employment Law Update Seminar

Are you prepared with commission agreements for your employees?

Did you know that some employment agreements are now illegal?

Are you asking applicants for social media passwords?

Do you allow non-employees to view personnel files?

 Don’t miss this dynamic speaker who is back by popular demand and will share information about these topics and more.  Stephen Hirschfeld Esq will:

 *make the learning fun by sharing memorable court cases from 2012;

*give us important tools to keep out of trouble; and

*will make recommendations for policies that work.

Stephen Hirschfeld is a founding partner and co-manager with the law firm of Hirschfeld Kraemer LLP, in San Francisco, CA. He is also the Chief Executive Officer of the Employment Law Alliance (ELA), the world’s largest network of labor and employment lawyers.