You can receive some fringe benefits for work to pay for commuting or parking expenses, including direct expenses and transit allowance.
According to the IRS, qualified fringe benefits can be excluded from your income tax return up to certain limits. These benefits include transportation, such as transportation between your home and work, transit, parking, and reimbursement if you commute by bicycle.
The amount of fringe benefit transportation on a vehicle carrier or transit pass that can be excluded from your taxable income is $125 per month. For qualified parking, the deductible amount is $240 per month. And for bike commuting, the deductible amount is $20 per month, the number of months you commute per bike per year.
The IRS indicates that for transportation to be excludable, the vehicle must have a capacity for at least six adults who do not include the driver, and at least 80% of the vehicle’s commuting mileage and trips in which employees occupy at least half of the vehicle’s capacity.
Transit can be transit, signs, turnstiles, or authorities to use public or private mass transit, or in a Vehicle operated by a person in the transportation business.
Parking means parking at or near your employer’s place of business, or parking at or near the place where you take mass transit to work.
The IRS also indicates that the benefits of the minimum transfer can be excluded from income taxes. Minimum benefits could include occasional transportation, just when you work overtime.
According to the IRS, fringe transfer benefits may be excluded up to applicable limits even if they are provided in lieu of wages. But the benefits for commuting by bicycle are an exception, and cannot be excluded if they are provided instead of wages.
If you receive fringe benefits that are subject to income tax because you receive a non-qualified benefit exclusion or pre-excludable amount, your employer must include the taxable amount on your W-2 in box 1 as compensation. This would be reduced in any way, so that the employee would pay for the benefits.
If you need to include any fringe benefits for transportation in your taxable income, remember that commuting expenses are not deductible as itemized deductions for employment related expenses. If you have non-exempt transportation expenses other than commuting to other jobs, or to go to clients, customers, or vendors, you may be able to claim a circumstantial deduction.
Sources:
Publication 15-B, Employers’ Tax Guide to Fringe Benefits, IRS
Publication 525, Taxable and Nontaxable Income, IRS
Report:
- Bicycle Commuting Tips: voices.yahoo. com/bicycle-commuting-tips-8420259.html?cat=5
- You dare not bring these expenses! finance.yahoo.com/news/dont-dare -deduct-expenses-070303474.html
- 10 tips for commuting to work or school: voices.yahoo.com/10-tips-commuting-work-school-7745188.html?cat=27
