If you are an employer doing research to find out what the best options are, or an employee considering joining your company’s commuter benefits program, we’ve provided this list of top terms you should know to make sure you’re fully aware of how the benefit works.
Here are the top 10 terms and phrases employees and employers should know when it comes to commuter benefits.
1. Pre-tax Deduction
Refers to the amount of employee commuting costs deducted before taxes, lowering taxes per paycheck, providing more pay to take home.
2. Post-tax Deduction
When the amount of money, after taxes, deducted to cover commuting costs above monthly IRS limits, and placed on a prepaid card for convenient commuting payments.
3. Tax-free Dollars
Dollars used toward your benefit, regardless if it’s pre-tax deduction or provided as a subsidy.
Refers to the Internal Revenue Code which are the regulations kept by the IRS to define tax law.
The section of the IRC describes the rules pertaining to transit and parking benefits. It’s also where the monthly limit on tax-free dollars toward is defined.
6. Qualified Transportation Fringe Benefits
This is the name that refers to commuter benefits in section 132(f) of the IRC.
7. Commuter Benefit Products
These are the prepaid cards, smart cards, vouchers, transit passes, and other ways to make commuting tax free, not only convenient, but also compliant with IRC 132(f).
8. Commuter Benefit Programs
The actual platform, or process, that is provided to manage the tax-free dollars and the wide variety of commuting amounts and modes used by employees, to ensure the convenient and compliant delivery and use of the benefit every month.
9. Commuter Benefit Services
This is the assistance that the commuter benefit provider delivers to support the employer in the successful management of the program, which could include technology support, employer training, and employee education.
For the employee, service relates to resolving any issues in using the benefit products to ensure smooth commuting.
While transit and vanpools are managed by transit agencies, and carpools are organized by employees themselves, rideshares are the newest transportation service being offered by companies like Lyft, Uber and Via and can be used using tax-free dollars.
Want to know more? Get our free five step guide to learn how to launch a commuter benefit program.