As an employer, the proper use of your tools will determine if you remain competitive in the marketplace. Here are some tools to help you keep your edge.
Employer Tax Benefits:
How much could you save? By offering transit passes and or vanpools through work, there is no federal or payroll tax (social security, Medicare, etc.) on the benefit. In most states including Utah, there are no state or local taxes either. The savings for both the employer and employee could be significant.
These programs are only available through the employer, but the IRS makes them easy to implement. You don't have to file a plan with the IRS and they don't need to approve your program. As an employer, you can subsidize as much or as little of the program as you want. You have three options:
1- Fully subsidized. The employer picks up all the cost, up to $125 per month (2012 limit), for transit and vanpool expenses. The employee receives a free transportation benefit. The employer saves income and payroll taxes.
2- Partially subsidized. The employer picks up part of the cost, including employee contribution up to $125 per month (2012 limit), for transit and vanpool expenses. You can design your program anyway you'd like. The employer and employee save income and payroll taxes.
3- Pre-tax withholding from salary. Much like a 401K or Cafeteria plan, employees can have money withheld from their salaries to pay transit or vanpool expenses. The employee saves income taxes and the employer saves payroll taxes.
Good for business. Great for employees.
In addition to the tax benefits, a Commuter Benefit Program is a great way to increase employee job satisfaction, as well as attract and retain employees. It could also free-up valuable parking spaces and reduce the need to construct new parking facilities.
Start a Commuter Benefit Program at your company. it's good for society, good for the environment, and good for everyone's bottom line.