FAQ - Commuter Check Office
What is Commuter Check?
The Commuter Check is a tax-free Commuter Benefits program that allows employees to save on qualified commuting expenses. Commuter Check vouchers are used to pay for public transit, vanpooling, and parking. Available in any dollar denomination (including cents), they are redeemable across the country. Commuter Check was developed to help businesses promote public transit use, reduce traffic congestion and protect the environment. With Commuter Check, commuters can save 40% in after-tax value, while employers save 10% or more in payroll-related costs.
According to a 1998 federal tax law revision, employees can designate a pre-tax salary deduction to pay for transit fares and qualified parking. Thousands of employers also purchase Commuter Check vouchers as an employee benefit provided in addition to salary.
How do employers use Commuter Check, and do I have to give a monthly benefit?
Commuter Check is a flexible program, easily tailored for any company’s needs. It can be used as a pre-tax salary substitute, monthly benefit, incentive or bonus; to assist employees moving to a new location; or to introduce new employees to public transit. It can also be an effective recruiting tool, help reduce turnover and promote a less-stressed, more on-time workforce.
How do employees use Commuter Check?
Commuter Check is simple to use. Employees redeem Commuter Check vouchers for transit tickets, tokens or passes from participating transit operators and commercial parking vendors. They are conveniently redeemed at staffed sales offices and retail sales outlets for any type of prepaid fare, just like cash payments. Commuter Check is also accepted by vanpools. However, vouchers cannot be exchanged for cash or used for any purchase other than those specified above.
What are the relevant tax laws? Is Commuter Check considered taxable income?
Section 132(f) of federal tax law encourages employers to reduce employee mass transit commuting costs by allowing tax-free subsidies of transit passes, tickets, tokens, and parking. The maximum tax-free discount that can be provided to each employee for transit is $115 per month, and $220 per month for parking.
The 1998 changes in federal tax law allowed employees to take a pre-tax salary reduction to pay for transit fares or parking expenses. Under this law, employees can save up to $1380 in yearly transit costs, and almost $2640 a year in parking costs, through tax savings. These changes still permit employers to offer Commuter Check as a supplement to salary, or as a combination of the benefit and pre-tax options.
How much do employers and employees save?
For transit and vanpools, up to $115 a month ($1,380 a year) can be designated as a pre-tax payroll deduction. Employees can save more than $500 in annual commuting costs, while employers save up to $115 in payroll tax, per employee annually.
For parking expenses, up to $220 a month (or $2,640 a year) can be designated as a pre-tax payroll deduction, resulting in almost $1,000 in tax savings for the employee and close to $200 per year per employee for the company. These examples assume a 33% combined federal and state income tax rate; Social Security (FICA) taxes paid by both employers and employees (7.65% of salary); as well as unemployment, disability, workman's compensation and retirement costs driven by salary. Payroll tax savings are available to all employers, including non-profit and public sector employers that do not pay income or FICA taxes.
Also, ‘for-profit’ companies providing transportation benefits to supplement employee salaries can deduct the entire cost of the program (including administrative fees) as a business expense.
Who can participate? Are any employers too large or too small for the program?
No organization is too large or too small. All types of employers from single person offices to large businesses with multiple locations, from any industry in the private, public and non-profit sectors can participate in Commuter Check. It allows any size company to add to the benefits package without adding cost.
Can I get Commuter Checks in any denomination?
Yes. Commuter Checks are available in any amount up to $115 for transit and $220 for parking (including cents), per month.
Do I need to keep detailed records?
No complex record keeping is required. Like any company expenditure, copies of order forms and canceled checks should be retained. But no special IRS reporting, such as W-2 or 1099 statements, is required. (If an employer wants to report pre-tax deductions on W-2s, box 14 can be used.)
Do I need to keep detailed records?
No complex record keeping is required. Like any company expenditure, copies of order forms and canceled checks should be retained. But no special IRS reporting, such as W-2 or 1099 statements, is required. (If an employer wants to report pre-tax deductions on W-2s, box 14 can be used.)
How is my Commuter Check Office order delivered to me?
Commuter Checks are routinely shipped via UPS and arrive within 2-5 working days of shipment. Overnight delivery is available for an additional fee.