The government permits the employer to implement a Qualified Transportation Benefits program for employees who incur qualified expenses commuting to and from work. The program allows an employee to pay for their monthly transportation expenses with pre-tax dollars - up to IRS monthly limits in effect at that point in time. An employee who participates in the program will increase their disposable income because of the reduction in FICA and Income Taxes due to the pre-tax dollars. The amount of the employee's increase is dependent on their compensation and commuter expenses.
2018 Monthly IRS Pre-Tax Limit
Transit = $260.00
Parking = $260.00
2019 Monthly IRS Pre-Tax Limit
Transit = $265.00
Parking = $265.00
Qualified Transportation Benefits must be implemented by your employer in order for the employees to reap the tax savings. Employees cannot deduct their transportation expenses from their personal income taxes.
- QTB Services, Inc. specializes in outsourced administration for Qualified Transportation Benefits Program.
- QTB Services, Inc. will administer and monitor your program pursuant to government regulations. We provide all employee informational materials.
- QTB Services, Inc. will provide customer care for both employers and their employees.
What Expenses Qualify?
- Any Transit Pass defined as a pass, token, fare-card, voucher, or similar item entitling a person to a ride on a mass transit vehicle or a commuter highway vehicle.
- Fare on a Commuter Highway Vehicle (also known as a vanpool) is defined as any vehicle with 6 or more adult passengers, not including the driver, used for employment transportation. Eighty percent of all vehicle miles must reasonably be expected to be for the transportation of employees from their residences to work on trips in which at least 50 percent of the available seating is occupied by commuters (excluding the driver).
- Parking expenses incurred by an employee at or near their work place, or at or near an area from which employees commute to work utilizing mass transit, commuter highway vehicles or carpools. This benefit cannot be used for expenses at or near the employee's residence.
Bicycle: benefit has been discontinued based up the 2018 Tax Reform Bill
- Qualified Bicycle Commuting Expenses
- Employers can choose to offer their bike commuters a qualified bicycle commuting program. Employees can then be reimbursed up to $20 per month for each month that the bicycle is regularly used for a substantial portion of their travel to and from work.
- Qualified expenses include the purchase, maintenance, repair and storage expenses related to bicycle commuting.
- The bicycle benefit program cannot be used in conjunction with the Qualified Transit or Parking benefit program.
- 2019 Monthly IRS Bicycle Benefit Limit : $0.00