1. What is Commuter Tax Benefit?
3. Can I get a tax break without my employer's participation?
6. What types of transit services qualify for Commuter Tax Benefit?
8. What if my monthly fare is more than $110?
9. Is the program easy to set up?
1. What is Commuter Tax Benefit?
Commuter Tax Benefit is Connecticut's program to promote federal tax law allowing employees to set aside pre-tax income to pay for transit and vanpool fares. As of February 2009, employees may set aside up to $230 a month ($2760 a year) of their salaries before taxes to pay for transit and vanpool fares. An employee may also set aside up to $230 a month ($2760 a year) to pay for qualified parking expenses.
If you spend at least $200 or more per month on your train, bus, ferry or vanpool fare, you may save more than $800 annually on federal and state income taxes alone. Your employer saves, too - by eliminating the payroll taxes they would have paid on the amount you set aside.
3. Can I get a tax break without my employer's participation?
No. The tax benefit is available only through an employer-sponsored commute benefit program.
Once your employer makes the necessary adjustments in the payroll system, you may enroll by authorizing a payroll adjustment in the amount you intend to use for transit/vanpools and/or parking per month. In return, you will receive transit ticket/pass, vouchers (TransitChek) or, in some cases, cash reimbursement after submitting proof of transit or vanpool use (ticket, pass, receipt). Parking costs are reimbursed in cash, with a receipt.
Qualified parking is parking at or near an employer's worksite, or at a facility from which an employee commutes via transit, vanpool or carpool.
6. What types of transit services qualify for Commuter Tax Benefit?
Any type of transit service, publicly or privately owned or operated, including bus, rail, subway, ferry, subscription bus, shuttle bus, and commuter highway vehicles under contract that provide to the public and/or employees, general or special service on a regular and continuing basis.
7. How much should I set aside?
The amount you set aside may not exceed your monthly train, bus, ferry or vanpool fare.
8. What if my monthly fare is more than $230?
The $230 for transit/vanpools and $230 for qualified parking are caps - you may claim only up to these limits on a monthly basis. Your expenses above the caps will be paid with taxable income.
9. Is the program easy to set up?
Yes. There are no plan filings or forms for the employer to complete, no "use it or lose it" rules, no irrevocable elections, and no mandatory enrollment dates. It is not subject to the regulations governing cafeteria plans - and, in fact, cannot be offered as part of a cafeteria plan. The program requires you, the commuter, to authorize a simple payroll adjustment that designates tax-exempt status for a transportation fringe benefit.
Contact your Human Resources department and ask about Connecticut's Commuter Tax Benefit program. If they don't already have a Commuter Tax Benefit program planned or in place, please complete this form and we can contact them.
