Commuter - Employer
- How many employees do I need to sign up for commuter benefits?
- What are the different types of commuting expenses covered?
- What are the current monthly tax-free allowable limits?
- What expenses aren’t covered?
- What’s the difference between a subsidy and a pre-tax deduction?
- How will my employees get their commuter benefits?
- How do employees use their commuter benefits?
- Can employees redeem commuter benefits for cash?
- Do commuter benefit products come in set dollar amounts or can my employees choose any value?
- How do vanpools work?
- Can my employees get their benefits automatically each month?
- Do I need to keep detailed tax records?
- How long would it take to set up my company’s own commuter benefits program?
- Can my employees get commuter benefit products in any value?
What’s the difference between a subsidy and a pre-tax deduction?
A subsidy is an employer paid benefit, whereas, a pre-tax deduction is an employee paid payroll deduction. Commuter benefits can be offered as either a subsidy, pre-tax payroll deduction or a combination of both. Offering the benefit as a subsidy is more cost effective when considering giving an employee the equivalent raise in salary due to the tax advantages. For example, a parking subsidy of $250 is roughly equivalent to a $406 pay raise which would be taxable income. A subsidy saves the employer on payroll taxes and the employee on having to pay additional taxes on a higher income.
Last update on May, 7 2014 by Elizabeth Bonney.