The Perfect Perk For Your Employees
As fuel costs continue to be high, employees are looking for ways to save on their commutes to work. Transportation Reimbursement Accounts are a valuable employee benefit as they help employees save time and money when they use public transit for their commute to work.
What are Qualified Transportation Accounts (QTAs)?
QTAs allow employees to set aside pre-tax funds for eligible transit and parking expenses related to their commute to work, governed by IRC Section 132. If the participant has both a parking account and a transit account, each account is entirely separate, and funds cannot be transferred from one to the other.
Transit and/or parking benefits are limited to employee work-related expenses only; reimbursement is not allowed for spouse or dependent transit or parking expenses.
The IRS sets maximum monthly pre-tax deduction and spending amounts (adjusted annually). These limits reflect the maximum allowed pre-tax contribution and reimbursement amounts per calendar month.
2020 limits are: Transit Passes or Commuter Highway Vehicles are $270/month, and Parking is $270/month.
Unused amounts can be carried over. Contributions are available for reimbursement based on payroll deduction cycle (like a Dependent Care FSA). The employee can track account activity on the Streamline HR Consumer Web Portal.
How the Streamline HR MasterCard Works with Commuter Benefits
The Card maintains separate accounts or “purses” of pre- (and post-) tax money for parking and transit expenses, and directs the card transaction to the appropriate purse based on the Merchant Category Code (MCC) at the point of sale.
If the participant already has a Streamline HR MasterCard for other accounts, such as FSA, HRA, or HSA, the commuter benefits account(s) can be stacked on the same Card. The Card cannot be used at alternative outlets, such as restaurants and grocery stores.
The amount of available funds on the card must cover the entire mass transit or parking expense or the transaction will be declined. The participant may split the cost by swiping their Card for the exact available amount and then pay for the remaining amount with an alternate form of payment.
Using the Card for Parking
When the participant uses the Card for parking expenses, there’s no paying cash up front, no claim forms to fill out, and no waiting for reimbursements.
The Card helps with qualified QTA expenses such as parking expenses for any type of vehicle at or near the participant’s work location, or at or near a location from which the participant commutes using mass transit.
Using the Card for Transit
The Card can be used for mass transit passes, tokens, or fare cards purchased at a valid transit fare terminal.
Benefits to Participants
The Card program offers the following advantages for the participant:
The IRS allows a monthly maximum of $270 for transit and $270 for parking per month to be deducted from an employee’s pay before taxes, which can mean substantial tax savings.
Ease of Use
The Streamline HR MasterCard is easy to understand, convenient and provides an automatic way to pay for qualified transit expenses.
Participants are able to use a secondary form of payment when the purchase exceeds their monthly election.