News City businesses must allow workers to buy MetroCards with pretax money

[Harry]

 

City businesses will be required to let their workers pay for MetroCards with pretax money under a bill passed Tuesday by the City Council. The bill, which passed unanimously, says that businesses with at least 20 workers must participate in a federal program allowing them to set aside cash for transit costs without paying taxes. The program was previously optional. The rules will cover 450,000 people, and the average New Yorker who buys a monthly MetroCard will save $443 a year, backers say. “We are going to give our transit riders a much-needed break,” said Councilman Daniel Garodnick (D-Manhattan).

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[MTA Dude]

What exactly is this?

[Via Garibaldi 8]

This is a great deal! 

 

 

What exactly is this?

Basically if you work and commute to or in the city with public transit, or with a car or a bike, you can get a tax break. Monies are taken out of your check BEFORE taxes are deducted which makes you GROSS salary look smaller, thus resulting in you pay less taxes and having more money in your pocket. You have a few ways that you can pay for your transportation and maximum amount that you can deduct for your transit expenses.  Two of the main players are WageWorks and TransitChek.  Similar programs and WageWorks owns both companies.  I prefer WageWorks since it is more flexible in terms of not just focusing on subway riders who buy monthly Metrocards.  WageWorks focuses on various types of commuters, those in cars, those biking, using the commuter rails, or the express buses, so you can have more deducted towards your transportation costs that are tax free.

[realizm]

What exactly is this?

This is a way of reducing the amount of federal income taxes you pay so you can keep more of your pre-tax weekly or bi-weekly earnings depending on how your boss pays your wage or salary, as a courtesy from the company you work for. Taking pre-tax money taken directly from your paycheck reduces your taxable income and as a result your tax liability as well.

 

So in this case money is set aside for travel expenses and is not taxable. You get every cent back at the end of each fiscal period depending on your employer. So if you have a high tax liability because you earnings falls in a higher income bracket you will not be as heavily taxed since much of that money will be set aside for travel reimbursement that the IRS cannot tax by law.

[MTA Dude]

Wait, this doesn't do any bad for the , does it?

[realizm]

No, the MTA gets their collection revenue from their customers either way.

[MTA Dude]

Good.

[N6 Limited]

Wait, this doesn't do any bad for the , does it?

 

 

No, the MTA gets their collection revenue from their customers either way.

Yes and no. The money the MTA gets from NY and the Fed Govt comes from taxes.

[bobtehpanda]

Yes and no. The money the MTA gets from NY and the Fed Govt comes from taxes.

 

I think what he means is that the MTA gets paid the price of the Metrocards anyways; it's treated as a pretax benefit instead of being paid after income taxes are collected, so the government just loses out on hypothetical revenues.

[N6 Limited]

I think what he means is that the MTA gets paid the price of the Metrocards anyways; it's treated as a pretax benefit instead of being paid after income taxes are collected, so the government just loses out on hypothetical revenues.

Ok, I'm just saying they lose out on hypothetical revenues, which helps fill their coffers, which are partly used to fund mass transit.

[realizm]

Ok, I'm just saying they lose out on hypothetical revenues, which helps fill their coffers, which are partly used to fund mass transit.

 

Yes I mean that they would not tax the MTA for participating in the program. The MTA is funded by city state and federal dollars and they keep the revenue accumulated from fare collection revenue (Back to the Metrocards that the MVM or station agent sells for a price, railroad tickets and so forth). Possibly many employees in business firms, hospitals and so forth that are now mandated to set aside pre-tax money for public transportation costs may encourage more riders to ride with NYCT, MTA Bus (local city routes, SBS and the express buses etc), the MNRR and the LIRR. As this measure taken by NYS will help to provide more transportation options that are more affordable to customers. This should also apply to people that are outside city boundaries but are reliant on the MTA via the LIRR and MNRR to get to work in NYC.

[bobtehpanda]

Ok, I'm just saying they lose out on hypothetical revenues, which helps fill their coffers, which are partly used to fund mass transit.

 

That loss is for the federal government, and in the grand scheme of things it's not a big amount compared to the federal budget (and they don't fund operations anyways.)

[161 New York]

This is a way of reducing the amount of federal income taxes you pay so you can keep more of your pre-tax weekly or bi-weekly earnings depending on how your boss pays your wage or salary, as a courtesy from the company you work for. Taking pre-tax money taken directly from your paycheck reduces your taxable income and as a result your tax liability as well.

 

So in this case money is set aside for travel expenses and is not taxable. You get every cent back at the end of each fiscal period depending on your employer. So if you have a high tax liability because you earnings falls in a higher income bracket you will not be as heavily taxed since much of that money will be set aside for travel reimbursement that the IRS cannot tax by law.

 

This is correct.

 

This will reduce your net pay, not your gross pay as another post said.

 

Currently, the pre-tax amount allowed by the IRS per month is $130, down from $240 a year ago due to inaction from the US Congress. You can put any amount on the "voucher", however that would be taxed at regular rates.  

 

My previous company used Commuter Check and everything was done through payroll department.

 

 

The more popular choice for these providers is to issue debit cards. You can use the debit card for any transit agency. When I was working in New Jersey, I used the card for both NJ Transit and MTA NYCT.