2014 IRS limits for Qualified Transportation Fringe
"Qualified Transportation Fringe Benefit. For taxable years beginning in 2014, the monthly limitation under 132(f)(2)(A), regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass, is $130. The monthly limitation under 132(f)(2)(B), regarding the fringe benefit exclusion amount for qualified parking, is $250". http://www.irs.gov/pub/irs-drop/rp-13-35.pdf (see page 14)
The recently passed fiscal cliff bill included restoration of the commuter tax benefits. This raised benefits from $125 per month to parity with the parking benefit. The IRS has issued instructions for employers and employees to take advantage of the retroactivity feature through a “special administrative procedure.”
American Taxpayer Relief Act of 2012 (CY2013 Transit to $240)
Please inform your employees about these changes to ensure proper adjustments are made within their Passenger Allocation account.
SmartBenefitsSM is a better alternative. Read the Washington Post article, "GAO Finds Fraud in Commuter Program."
In June 1998, the Transportation Equity Act for the 21st Century (TEA 21) was signed into law. TEA 21 includes a provision amending the Internal Revenue Code (26 U.S.C. Section 132(f)). This amendment to the tax code allows employers to offer their employees public transportation benefits in addition to salary or wages, or allow the employee to elect to receive SmartBenefitsSM as a pre-tax payroll deduction, or some combination of the two.
Federal legislation prohibits cash or paycheck reimbursements when voucher programs are available.
Under federal tax laws, SmartBenefitsSM are available four ways. Many employers reap a 2-to-1 benefit. (Specific tax rules may vary according to state and type of enterprise.)