The recently passed legislation averting the so-called ‘fiscal-cliff’ American Taxpayer Relief Act of 2012 (HR 8) included a provision that will re-establish parity between the parking and transit benefits at $240/month. The provision is effective immediately and is set to expire at the end of 2013.
We have made changes to our system to increase the monthly maximum limit. This change affects plans that were active from January 1, 2012 and later. Until the IRS issues specific guidance regarding the retroactive portion of the reinstatement, our efforts are focused on changes as of January 1, 2013. Once guidance is issued, we will follow-up this notification with additional information.
If your plan is using our Flex Debit Card feature, we will be increasing the monthly maximum to $240.00 for all current active clients with an active pre-tax Transit and/or Parking account. Any new pre-tax transit/parking accounts that are created will be created with a monthly maximum of $240.00. This change will be made by Wednesday January 9, 2013.
About the IRS Commuter Benefits or Qualified Transportation Plan (QTP)
Federal law allows employers to establish Qualified Transportation Plan (QTP) to reduce the cost of commuting via public transportation (bus, train, ferry or registered vanpool) or qualified parking for employees. QTP plans are governed by IRS Section 132 that allows employees to contribute a certain amount of their gross income to a designated account or accounts before taxes are calculated. These accounts are for specified transportation and parking expenses for commuters. Only employees (not owners) are eligible to participate in a QTP.
The tax-exempt and pre-tax limits are set by the IRS. The following are the limits that have been established for the 2013 tax year. Based upon the recently passed ATRA (HR8) the effective date allows for retroactivity back to January 1, 2012 for transit.*
The two types of pre-tax QTP accounts are:
- Transit & Vanpooling Accounts
- Parking Accounts
Limits for 2013 are as follows:
- $240 per employee per month for vanpool, bus, ferry, rail (all public transportation)
- $240 per employee per month for qualified parking, or
- $480 per month per employee for both public transportation and qualified parking.
When an employee pays part or all of the cost of qualified public transportation expenses via a pre-tax payroll deduction, the employee can set aside up to $240 a month of pre-tax income. By enrolling in a Qualified Transit Plan, employees save federal withholding and FICA payroll taxes on the amount deducted. Employers save paying FICA on the amount deducted. Employers and employees may also share the cost of transit costs employers using after or post-tax income.
For more information about Qualified Transportation Plans (QTP) – please refer to IRS Publication 15b.
* Until the IRS issues specific guidance regarding the retroactive portion of the reinstatement, our efforts are focused on changes as of January 1, 2013. Once guidance is issued, we will follow-up this notification with more information.