By Jeremy Doak
Commuter Check and VPSI have teamed up to promote commuter benefits to employers and employees across the nation. The leading vanpool and commuter benefits provider make it easy for employees to take advantage of pre-tax commuting savings through a seamless integration of services that provides a number of options for employers to offer a cost saving benefit without any administrative burdens.
In these tough economic times, employers are looking for ways to retain good employees and improve the bottom line. Employers who offer pre-tax commuter benefits and encourage their use can save employees, themselves and their company money while reducing traffic congestion and improving air quality.
According to the American Public Transportation Association, a solo auto commuter who switches her commute to existing mass transit can cut her carbon emissions by more than 4,800 pounds per year. There is no simpler action an individual can take to make such a significant reduction.
For employers, the general rule is that any money paid to an employee is subject to tax. The IRS has created several exceptions to this rule, including one for transit benefits. Under Internal Revenue Code section 132(f), employers may voluntarily provide a program that allows employees to reduce their monthly commuting expenses for transit, vanpooling, and parking. In 2009, employees may elect to exclude from their gross income commuting costs incurred for transit passes or vanpool charges up to $230 per month, and an additional $230 for commute related parking expenses.
Employees who elect to make qualified pre-tax deductions from their wages to purchase transit passes, pay for vanpooling or parking reduce personal income taxes, as the amount designated is deducted from the employee’s gross income. Employees also save, because they are using pre-tax dollars to pay for their commute.
When employees elect to use qualified pre-tax deductions, employers in turn save on payroll taxes, since such taxes are paid on the reduced employee gross income. Commuter benefits are also a helpful tool for employee recruitment and retention. And while there are administrative costs to manage a commuter benefits program, once the employer sets up in-house administration or hires a third party vendor and rolls out the program, costs are low.
A commuter benefit program has immediate and significant value to employees. Some employee benefits, like 401(k) plans, health coverage, and employee assistance plans are extremely valuable and expensive, but may be unappreciated by employees who are not regularly using the benefit. For example, a 401(k) account balance belongs to an employee, but the full amount of the account is not available for years, even decades. Qualified pre-tax commuter benefits are a relatively inexpensive benefit that employees receive and use every month.
VPSI’s vanpool program allows individuals, who do not have access to public transportation or the local transit system is just not convenient, to take advantage of commuter benefits, have fun commuting, reduce their carbon footprint and their personal cost of commuting. Working with Commuter Check, VPSI riders can take advantage of pre-tax savings through the using their pre-tax funds to pay their monthly vanpool expense with transit vouchers, online with the Commuter Check Card, or have payment sent directly to VPSI, which will show on the van’s invoice. All choices are simple to administer by the employer and simple to utilize by employees.
VPSI and Commuter Check focus on reducing SOV trips to maximize the effect on air quality, traffic congestion and the bottom line for employers. Employers must also go beyond merely offering commuter benefits and must actively encourage their use. Some methods include eliminating on-site or subsidized parking for employees, subsidizing vanpools, providing educational materials for employees on how to get a vanpool started and simply promoting the Green power of mass transit.
Tags: 401(k), American Public Transportation Association, carbon emissions, commuter benefits, IRS, Jeremy Doak
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