Commuter Tax Benefits
When you rely on Long Beach Transit, you'll save money now and down the road. Yes, you'll not only do your part to save the earth and reduce our dependence on oil, but you'll also save money on your daily commute and taxes.
Why it’s a smart choice for employees.
Why it’s a smart choice for employers.
Reduce your driving expenses.
Do you wonder how much you could really save by taking Long Beach Transit? According to a recent report conducted by the American Public Transportation Association based on national averages, commuters can save an average of $9,215 annually on the typical fixed and variable costs of driving, including gas, maintenance, tires, insurance, license registration, depreciation, finance charges, and parking. Even if you keep your car and commute a couple of days a week, you can significantly reduce your overall cost of ownership. To learn how much you could personally save, try this handy Transit Savings Calculator.
Reduce your taxes.
Commuter Benefits are a great way to shelter one's income. Employees do not pay federal income or payroll taxes on transit commuter benefits, except on the amount (if any) in excess of $230 per month. Generally, state and local taxes do not apply either. These are treated just like other fringe benefits (e.g., employer-provided health insurance).
Reduce your employer payroll and other taxes.
The employer's cost of providing benefits may be deducted as a normal business expense. And, unlike ordinary wage payments, employers do not have to pay their share of federal payroll taxes on transit commuter benefits. This payroll tax savings alone is usually more than enough to defray the cost of administering the program.
For complete details on how the new Employee Rider Program will affect your taxes, please consult your tax advisor. 
Create a new employee benefit.
There are three different ways that employers can manage these Commuter Benefits. According to federal law: :
- Workers can receive up to $230* a month in employer-paid tax-free transit costs.
- Workers can take up to $230 a month in tax-sheltered payroll deductions for transit costs
- Employers can share the transit costs with their workers by paying part of their monthly pass and letting workers pay the balance using pre-tax dollars.
* Maximum benefit effective January 2008. Benefit may increase in $5 increments, based on Cost-of-Living Adjustments.
Either way, both employers and their employees can save money by participating in their Employee Rider Program.
Commuter Benefits are simple to administer. It does not require extensive record keeping. Employers only need to keep a record of pass purchases. They are encouraged to maintain records that reasonably demonstrate that any cash paid to employees is being used to cover their actual transit commuting costs. Nondiscrimination rules do not apply to these benefits.
Although the Commuter Benefits cannot be offered as part of a cafeteria plan, employers may use the same forms and administrative procedures that they use for their cafeteria plan. Employers may also rely on other parties to administer this transit commuter benefit program.
Tax Benefits.
We can meet with your employees to explain all the benefits and savings of starting an Employee Rider Program. |
