- Days left

Signing Up for Commuter Benefits Can Cut Your Tax Bill

If your employer offers this pretax subsidy, you can usually enroll anytime during the year.

×
Signing Up for Commuter Benefits
Ben Margot/AP
By Kimberly Lankford

My employer lets us set aside pretax money for commuting costs, but I didn't sign up at the beginning of the year. I just moved, and now I take the subway to work. Can I still get the subsidy? How much is it?

It's probably not too late. You can usually enroll anytime during the year for this monthly benefit. Contact your employer's benefits department to find out how to sign up.

Under the commuter benefits program, you can set aside up to $130 per month pretax for public transportation, such as the subway, bus or train.
People who drive to work can set aside up to $250 per month pretax for parking, and if you both drive and use public transportation -- if you, say, drive to a park-and-ride lot at the subway or commuter rail station-- then you can take both benefits and set aside $380 per month.

Once you enroll, your employer will automatically set aside the money, which won't be subject to income, Social Security or Medicare taxes. You can tell the benefits department to stop setting aside money -- usually for full-month increments -- if, for example, you'll be out of the office for a few weeks. You can then resume the benefits.

Keep an eye out for an increase in the commuter benefit limit. In past years, the public transportation and parking subsidies were the same, and Congress may still bump up the public transportation benefits for 2014 to match the parking benefits. "In the coming weeks, Congress will be determining if and how they will address a tax-extenders package, including commuter benefits," says Dan Neuburger, president of commuter services at WageWorks, which administers pretax benefits for employers. See WageWorks' employee site for more information and updates.


More from Kiplinger


Increase your money and finance knowledge from home

How to Buy a Car

How to get the best deal and buy a car with confidence.

View Course »

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

TurboTax Articles

Tax Tips for the Blind

Anyone whose field of vision falls at or below 20 degrees, who wears corrective glasses but whose vision is 20/200 or less in his best eye, or who has no eyesight at all, meets the legal definition of being blind and is eligible for certain tax deductions.

What is Form 4255: Recapture of Investment Credit?

When is a tax credit not a tax credit? When the IRS takes it back. If you're in the situation where you have to file IRS Form 4255, you might have to pay back a tax credit you've earned in prior years. This process, known as recapture, occurs if you claim a credit -- in this case, a credit for a specific type of business investment -- and then no longer qualify for that credit.

The Most Important Tax Forms for ALEs (Applicable Large Employers)

In 2015, some parts of the Affordable Care Act specifically apply to businesses, in particular, large employers. The Employer Shared Responsibility provisions affect companies with 50 or more full-time employees or an equivalent of part-time or seasonal workers. These companies are called Applicable Large Employers, or ALEs. 2015 is considered a transition year as everyone gets used to the new normal for workplace health plans.

Employer Sponsored Health Coverage Explained

The Affordable Care Act, also known as Obamacare, is simpler than some people may give it credit for. The basic rule to remember is that everyone must carry Minimum Essential Coverage (MEC) or pay a penalty. Employers with 50 full-time employees or more are obligated to sponsor plans for their workers to help them meet this requirement.

How to Report RSUs or Stock Grants on Your Tax Return

Restricted stock units (RSUs) and stock grants are often used by companies to reward their employees with an investment in the company rather than with cash. As the name implies, RSUs have rules as to when they can be sold. Stock grants often carry restrictions as well. How your stock grant is delivered to you, and whether or not it is vested, are the key factors when determining tax treatment.

Add a Comment

*0 / 3000 Character Maximum