How does a commuter benefits account work?
What is a Commuter Benefits Account?
A commuter benefits account is an employer-sponsored benefit program that allows you to set aside pre-tax funds in separate accounts to pay for qualified mass transit and parking expenses associated with your commute to work.
What are the benefits of a commuter benefits account?
Tax Benefits
Contributions to a commuter benefits account are deducted from your paycheck on a pre-tax basis, reducing your taxable income. You can save an average of 30%* on your eligible transit and parking expenses.
*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%, state tax rate of 5%, and 7.65% FICA.
What expenses are considered eligible?
Qualified Mass Transit Expenses
Items that qualify as a mass transit expense include transit passes, tokens,
fare cards, vouchers, or similar items entitling you to ride a mass transit vehicle to or from work. The mass transit vehicle may be publicly or privately operated and includes bus, rail, or ferry.
Qualified Parking Expenses
With a commuter benefits account, you can be reimbursed for parking expenses incurred at or near your work location or a location from which you continue your commute to work by car pool, van-
pool or mass transit. Out-of-pocket parking fees for parking meters, garages and lots qualify. Parking at or near your home is not an eligible expense.
Qualified Van-Pooling Expenses
Van-pooling is not to be confused with carpooling. Van-pooling requires a commuter highway vehicle with a seating capacity of at least 7 adults, including the driver. At least 80 percent of the vehicle mileage must be for transporting employees between their homes and workplace with employees occupying at least one-half of the vehicle’s seats (not including the driver’s seat).
How can I contribute to my commuter benefits account?
Contribution Limits
There are monthly limits set by the IRS for Commuter Benefits. Your employer may decide to limit these amounts. Check with your employer to determine your maximum contribution limits. For 2024, contributions for transit and van-pooling are limited to $315 per month. Parking contributions are limited to $315 per month. Any monthly expenses above these limits cannot be exempt from taxes and cannot be applied to future months.
Adjusting Contributions
You can make adjustments to your contribution, join, or terminate plan participation at any time.
How do I access my commuter benefits account funds?
Payment Options
You authorize your employer to deduct a pre-tax amount for parking and/or van pooling/transit throughout the year, up to the IRS limits. You pay for the qualified transportation with your benefits debit card or you can pay out of pocket and then file a claim for reimbursement.
Funds Deadlines
The money left in your account may be carried over into the next plan year, if you continue to participate in the plan.
