Commuter Benefits Programs have been developed to offset the costs of commuting for employees while helping both employers and employees save on taxes. Many businesses are considering implementing commuter benefits in 2020, but aren’t sure how to set up a commuter benefits program. Our technologies include benefit software that simplifies developing commuter benefits programs. Before developing such a program, learn the truth about commuter benefits programs.
What Is a Commuter Benefit Program?
Commuter benefits programs are a type of fringe benefit employers may choose to offer. A commuter benefit program is a program where an employer loads funds into a specific account, like a prepaid card, that are used solely for commuting costs. These funds are allocated from an employee’s pay when the employee chooses to sign up for this program, the dollar amount they choose is deducted from their pre-tax pay and set aside into the commuter benefit program.
Are Commuter Benefits Taxable?
The commuter benefit program is designed to help employees and businesses save taxes. Generally, commuter benefit program funds are tax-free for both employers and employees. The dollar amount that employees choose to have funneled into their commuter benefit account are not included in their taxable income for federal taxes, and employers can save on payroll taxes as well.
How Does the Commuter Benefit Work?
Once an employee has signed up for their employer’s commuter benefits program, the funds they have preset will be automatically deducted from their pre-tax paycheck and loaded into an account or a card that is only available to use for transportation related costs.
Not every type of commuting method is covered by commuter benefit programs. These programs were developed to help encourage use of public transportation, mass transit, carpooling, and other more environmentally friendly modes of transportation. This means that in general, employees who commute in their own car without any other coworkers may not qualify.
The types of transportation most commonly included in commuter benefits programs are:
- Mass transit like buses or subways
- Vans with at least six employees
- Bicycling expenses
- Parking costs
How to Set Up a Commuter Benefits Program
Commuter benefits programs can help both employees and employers save on taxes. These fringe benefits are becoming increasingly popular, especially for businesses in areas with robust mass transit systems. At Valiant, we can help your business establish commuter benefits programs along with additional solutions for time and labor management. Contact us today to learn more.