Transit Reimbursement Account
What is a Transit Reimbursement account?
A Transit Reimbursement Account is a provision under the Internal Revenue Code Section 132 that enables employers to allow their employees to have certain commuter expenses taken out of their paycheck on a pretax basis and deposited into an account. These expenses would be taken out before the Federal tax, FICA tax, and the State tax. The Transit Reimbursement Account also allows the employers to save on the matching FICA that they would have had to contribute on this amount.
How does a Transit Reimbursement account Work?
An employee elects to have an amount transferred from his gross paycheck, before taxes are taken out, and put into a Transit Account. When the employee incurs an eligible out-of-pocket expense for this account, they would present their Transit Reimbursement Account Debit Card for payment or receive a receipt indicating the date of service, what was purchased, and for how much. If they use their Transit Reimbursement Account Debit card, the funds would be deducted directly from their account. An employee elects to have an account transferred from his gross paycheck, before taxes are taken out, and put into a Transit Account. When the employee incurs and eligible out-of-pocket expense for this account, they would present their Transit Reimbursement Account Debit Card for payment. The funds will then be deducted directly from their account. This check would be tax-free.
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Transit Passes and Van Pooling 2024 Limit: $315 Per month
Parking Reimbursement Account
What is a Parking Reimbursement Account
A Parking Reimbursement Account is a provision under the Internal Revenue Code Section 132 that enables employers to allow their employees to have certain Parking Expenses associated with work to be taken out of their paycheck on a pretax basis and deposited into an account. These expenses would be taken out before the Federal tax, FICA tax, and the State tax. The Parking Reimbursement Account also allows the employers to save on the matching FICA that they would have had to contribute on this amount.
How does a Parking Reimbursement Account Work?
An employee elects to have an amount transferred from his gross paycheck, before taxes are taken out, and put into a Parking Reimbursement Account. When the employee incurs an eligible out-of-pocket expense for this account, they would present their Parking Reimbursement Account Debit Card for payment or receive a receipt indicating the date of service, where they parked, and for how much. If they use their Parking Reimbursement Account Debit card, the funds would be deducted directly from their account. If they paid for the service or product by some other means, they would submit the receipt with a claim form, and would receive back out of their account the funds. This check would be tax-free.
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Qualified Parking Expenses 2024 Limit: $315 Per month
Why should I enroll in a commuter account?
Participating in a commuter account is a great way to be 'green' and save some green at the same time. Contributions to a commuter account are free from federal income, Social Security, and Medicare taxes and remain tax-free when it is reimbursed for eligible expenses. If you pay for mass transit, van-pooling, or parking on your commute to work, you will benefit from enrolling in one or both of these plans.
