When is $1.00 worth $1.50 or more? When a company pays its
employees benefits with pretax dollars. Does your company currently
offer transportation benefits to its employees?
Anyone who routinely pays for parking near an office or public
transportation stop knows how expensive it can get. For 2004, you
can pay up to $195 per month towards each employee’s parking fees.
While your employees won’t be taxed on this parking benefit, you
get to deduct the costs incurred. And by providing the benefit in
lieu of salary, you might also save 7.65 percent in social security
and medicare taxes.
When is $1.00 worth $1.50 or more? When a company pays its employees benefits with pretax dollars. Does your company currently offer transportation benefits to its employees?
Anyone who routinely pays for parking near an office or public transportation stop knows how expensive it can get. For 2004, you can pay up to $195 per month towards each employee’s parking fees. While your employees won’t be taxed on this parking benefit, you get to deduct the costs incurred. And by providing the benefit in lieu of salary, you might also save 7.65 percent in social security and medicare taxes.
Commuters who take advantage of public transportation get hit in the pocketbook as well. Under the current rules, you can pay up to $100 per month towards each employee’s commuting, either by giving employees tokens or passes, selling them tokens or passes at a discount, or reimbursing them for their commuting costs incurred. Combine the commuter benefit with the parking benefit, and up to $295 per month is tax-free to each of your employees and deductible by your business.
You can even drive your employees to and from work. Known as a “van pool” the vehicle must seat at least six people in addition to the driver and be used at least 80% of the time transporting employees. Be meeting these conditions, you’ll write off the cost of operating the van pool, while the value of this benefit
isn’t taxable to the riders.
Generally, the costs of setting up and maintaining these three transportation benefits are relatively low. To find out more about operating a van pool or paying your employee’s parking and public transportation costs with pretax dollars, please give us a call.
