by Jessica Vessels, CPA
If you live in almost any popular American city, you have probably felt the hassle of dealing with work commutes and limited parking situations. As a result of this urban congestion, many employers have made the move to help their employees with transportation benefits. This year, the Tax Cuts and Jobs Act (TCJA) has resulted in some changes to these qualified transportation benefits for employers.
The Tax Cut and Jobs Act changed the employer’s deduction of qualified transportation fringe (“QTF”) benefits provided to employees. Historically employers could deduct 100% of expenses related to employee parking and commuting (i.e. bus passes and commuting shuttles). Beginning on 1/1/18 these transportation benefits provided by employers are not deductible on the employer’s business tax return for amounts below $260 per month per employee.
The tax treatment of transportation for employees on their individual tax return has not changed. For 2018 monthly QTF benefits greater than $260 per month must be included in an employee’s gross wages. These amounts are indexed for inflation each year.
The IRS will be providing more guidance related to the employer treatment of QTF benefits later in 2019. Please contact your Sweeney Conrad tax advisor if you have additional questions.