Mass Transit

FEB 2015

Mass Transit magazine features agency profiles, industry trends, management tips and new product information.

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16 | Mass Transit | MassTransitmag.com | FEBRUARY 2015 According to the Commuter Benefts Work for Us Coalition, at $250 per month the tax beneft can end up saving working families as much as $1,100 over one year. Unfortunately, the legislation only covered 2014, so the higher monthly limit for transit commuters expired on January 1, causing the monthly limit to again plummet to the $130 level. While the legislation technically allows for the tax credit to be applied retro- actively to the beginning of 2014, in reality, few commuters will beneft from this. Background A provision in the watershed 2009 eco- nomic stimulus package elevated the monthly limit for the transit portion of the commuter beneft to the same level as the parking limit for the frst time in its history. However, the provision was only temporary and parity was set to expire at the end of 2011, until Congress enacted legislation to extend it for another year. Parity between the transit and park- ing benefts remained in place until the end of 2012, when Congress adjourned without enacting another extension. Tis meant a reduction in the transit beneft back to its original level (which had in- creased to $120 per month due to cost of living increases), while the parking bene- ft, a permanent part of the tax code, had increased to $240 per month. In January 2014, Congress enacted leg- islation to restore parity retroactively for 2013, and as noted took the same action in December for 2014. Retroactive Complications Tis roller coaster ride for the transit beneft has created a lot of confusion for commuters and employers. It is all but im- possible to apply transit commuter bene- fts retroactively. Unlike most expiring tax provisions, the commuter tax beneft is not something that is easily claimed on an annual tax return. Employee deductions are taken in advance of the purchase of transit passes that are used at a future date. In addition, most commuters only opt to deduct the maximum amount allowed un- der the law at the time of the deduction. For example, even if my monthly transit commute costs $250, in 2014 I would only deduct $130 from my paycheck to pay for my commute pre-tax, because that is the pre-tax maximum allowable under law. T LAST-MINUTE LEGISLATION restored parity between transit and parking. The Transit Commuter Beneft's Wild Roller Coaster Ride By Paul Dean Last-minute legislation was passed to restore parity between the transit and parking portions of the commuter tax beneft. Will bipartisan support for the permanent parity provision carry over in the new legislation? iStock HE LAST TWO WEEKS OF DECEMBER were indeed glorious for users of the transit portion of the federal commuter tax beneft. Congress, with last-min- ute passage of legislation to extend a number of expiring tax provisions for a one-year period, increased the pre-tax monthly deduction limit for mass transit commuters from $130 to $250 per month. Te legislation was passed to restore parity between the transit and parking portions of the commuter beneft, which allows working families to save money by using pre-tax dollars to pay for their commute.

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