How It Works
The transportation fringe benefit is similar to the pre-tax account that is available for medical costs and dependent day care costs.
Before the beginning of the Plan Year, employees elect to set aside a certain amount of pre-tax salary to cover qualified costs incurred in commuting to work. The employee will designate an amount (up to $230 per month for 2018) for mass transit expenses and another amount (up to $230 per month for 2011) for parking expenses. Separate reimbursement accounts are maintained for each category. Funds cannot be commingled or transferred between accounts (e.g., a transfer from the mass transit to the parking account is not allowed).
The aggregate maximum monthly exclusion for transportation and parking will total $460.00.
As the employee incurs qualified transportation expenses during the year, a claim form may be submitted for reimbursement. Any amounts remaining in the account at the end of the year can be carried over to the next year to be utilized for transportation fringe benefits if desired by the employer. Unused funds are not returned to the participants.
Who is Eligible: As a general rule, this transportation fringe benefit can only be provided by employers to employees. Common law employees and corporate officers are eligible. Two-percent shareholders of S corporations are not eligible. Qualified Expenses: Parking expenses that can be paid with pre-tax dollars include the cost of (1) parking a vehicle in a facility that is near the employee's place of work, or (2) parking at a location from where the employee commutes to work (e.g., the cost of parking in a lot at the train station so the employee can continue his/her commute on the train). Qualified mass transit amounts include the cost of any pass, token, fare card, voucher, or other item that entitles the employee to use mass transit for the purpose of traveling to or from his/her place of work. Transit may be via: A private or public mass transportation system.
A private mass transit enterprise conducted by a company or individual who is in the business of transporting people in a "commuter highway vehicle." Such a vehicle must have a seating capacity for six or more adults (not including the driver), and at least 80 percent of the vehicle's mileage must be from transporting employees to and from their place of work. Additionally, the vehicle must be used by a minimum of three commuters (not including the driver). The vehicle may be owned or leased by an employer for use by employees or a third-party provider. Employees can also own and operate commuter highway vehicles.