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Fringe Benefits – Transportation Tax Breaks

Rules Of The Road: How To Secure Employee Transportation Tax Breaks

Subway TrainAs with most tax breaks, you must meet detailed rules to secure tax-free treatment of yours companies qualified transportation fringe benefits. Here’s a brief rundown of the three categories of qualified employer-provided benefits:

TRANSIT PASSES: To qualify, a pass, token, fare card, voucher or similar item must entitle employees to transportation on a mass transit system or I hired vehicle, as long as it seats at least six adults, not including the driver.

Mass transit included bus, rail or ferry and it may be publicly or privately operated. You’re allowed to offer tax –free cash reimbursements for transit passes only if you can’t readily purchase vouchers to give employees.

QUALIFIED PARKING: To qualify, the parking space must be provided on or near your business or at a location where employees can leave their cars and then commute to work by mass transit, a hired van or by a car pool. One example is a “park and ride” lot.

However, the parking spot can’t be at or near an employees home- in other words, no tax-free payments to cover parking at a workers apartment or condo.

EMPLOYER-SPONSORED TRANSPORTATION: To qualify, a company must provide a vanpool or other “commuter highway vehicle” that has a seating capacity for at least six adults, not including the driver. Your company can furnish the vehicle and the driver or you can hire an outside firm to handle it.

At least 80 percent of the vehicles mileage must be incurred transporting employees between their homes and your workplace. Also, during at least 80 percent of its trips, the vehicle’s seats must be at least half filled with employees (not including the driver).

Note: Other than the parking perk, there’s no travel benefit for workers who commute in their own vehicles.

If you have any questions or require further info please call 718-531-1105 or send an email.

This web site and these articles are not tax or legal advice and are not intended as tax or legal advice.  They are intended to provide only general, non-specific legal information and are not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This web site and these articles are based on United States law.  You should consult with an accountant or lawyer familiar with the issues. This web site and the articles contained on this web site are not solicitations.

Contact Info:

Ronald Semaria
Semaria Consulting
1408 East 66th St
Brooklyn, NY 11234

Phone Numbers:

Phone: 718-531-1105
Toll-Free: 866-531-1105
Toll-Free: 888-IRSAUDIT
Toll-Free: 888-RONTAXES
Fax: 718-444-7152