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Reimbursement Accounts:  Qualified Transportation   Benefits

If your clients are looking to you for ways to save  their employees some  dough, we’re about to  make you look like a  hero.

A Qualified Transportation Benefit (QTB)  allows employees to pay for commuting  expenses with pre-tax dollars. By  reducing their taxable income, they’ll  save money – although planning ahead is  crucial. Employees must estimate their  expenses for the upcoming year before  enrolling in the benefit.

There are two components to a QTB –  parking and transit.

• A parking account can reimburse employees for expenses such as parking  lot fees or parking at a location for  access to mass-transit. 
• A transit account can reimburse  employees for expenses related to mass- transit fees, such as subway and train  passes, and bus fares.

It gets better. Beginning in 2016,  employers with 20 or more full-time employees in New York City must offer  full-time employees the opportunity  to use pre-tax earnings to purchase  qualified transportation fringe benefits,  other than qualified parking. Should  the employer attain the 20 full-time  employee mark but then fall below it,  the requirement will remain in force,  meaning that the employer will still be  required to maintain the salary reduction  transit benefit for those employees  originally qualified before the workforce  reduction.

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