Even when you love your job, you probably don't like getting to it much of the time. There's the time on the road, the traffic jams and occasional accidents, not to mention the cost of gasoline.
Mass transit has its hassles too -- crowded trains, waiting for a bus in the rain, and in some cases, it takes longer than driving because you have to make all sorts of connections.
Your boss can't do much about your actual commuting obstacles, but some companies are making workers' treks to the office a bit more tolerable by providing a tax-saving way to cover part of the transportation costs.
These workplaces offer their employees a benefit known as a Qualified Transportation Benefit, or QTB. They also are sometimes called a Commuter Savings Account, or CSA, or a Commuter Expense Reimbursement Account, or CERA.
Regardless of what you call them, they work the same. You contribute to a workplace account and then use that money to pay for public transportation and parking expenses that you incur getting to and from work.
The best part about these accounts is that your money goes into them before payroll taxes are computed. That then cuts your tax bill somewhat while helping you put away money you would spend on commuting anyway.
Here's a look at how one hypothetical commuter saves with a QTB account.
2008 tax savings with a workplace transportation account
|Less contributions of $110 per month||$1,320||$0|
|Result in taxable income after contributions||$38,680||$40,000|
|Less federal income and Social Security taxes withheld||$9,053||$9,484|
|Results in net income||$29,627||$30,516|
|Less commuting costs paid outside of transportation account||$0||$1,200|
|Results in spendable income||$29,627||$29,316|
Source: SHPS Holdings Inc., a health care and employee benefits outsourcing provider based in Louisville, Ky.
In addition to saving on federal taxes, depending on your state's tax laws, you may also avoid state and local income taxes on contributions to your commuter account.
2 types of accountsThere are two basic ways to get to work, by vehicle or by mass transit. The tax code rules governing transportation benefits allow you to put money aside in separate accounts to pay for both commuting methods.
Workers are allowed to contribute to one account to pay for parking the vehicle they drive work. They are also allowed to contribute to another account to cover mass transit costs. While the 2008 commuter in the example above put $110 a month into one transportation account, that's only about a third of the amount of money commuters could set aside per year to pay for bus and train transit passes, as well as van pool costs.
If you drove your own car to work or to a mass transit station in 2008, you were able to put up to $220 a month into a separate parking account. You could have used the money in that account to pay parking fees at train and bus stations or even for spots at or near your office.
The benefit is even better this year. Beginning in March, the combined transportation benefit maximum for the two accounts increases to $460, or $230 in each account.