- 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

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

What is Inflation?

Why do prices go up?

View Course »

TurboTax Articles

What is a 1098-E: Student Loan Interest

If you're currently paying off a student loan, you may get Form 1098-E in the mail from each of your lenders. Your lenders have to report how much interest you pay annually. Student loan interest can be deductible on federal tax returns, but receiving a 1098-E doesn't always mean you're eligible to take the deduction.

Amending Your Income Tax Return

What if you've sent in your income tax return for a previous year and then discover you made a mistake? You can make things right by filing an amended tax return. And, don't think an amended return will automatically cost you money; it's perfectly okay to change a return to capture a tax break you missed the first time around.

How to File Taxes with IRS Form 1099-MISC

If you receive tax form 1099-MISC for services you provide to a client as an independent contractor and the annual payments you receive total $400 or more, you'll need to file your taxes a little differently than a taxpayer who only receives regular employment income reported on a W-2.

Add a Comment

*0 / 3000 Character Maximum