Just how does an employer save money?
An employer may give the entire monthly or annual amount tax-free to an employee. In doing so, the employer can actually lower their Federal Income Tax costs, FICA and state taxes, as well. But not every business can afford to pay for the entire amount of the service.
Can the employer cover the entire service bill in order to attract the best and brightest recruits?
Yes. The is the employer paid benefit option. Businesses are not only providing a valuable employee benefit and helping their employees get to work timely and safely, but also are saving thousands of dollars in taxes. When the annual amount of the ECO Program’s fare is compared to an annual cash salary increase, the employer avoids the costs of FICA (Social Security) and reduces the amount of taxes owed to the State and Federal Government. The ECO Program allows companies to provide free shuttle services based on a cost relating to current ridership and ECO Program fare revenue at the worksite.
My company can’t cover the cost of The ECO Program’s fare. Can employees still pay for all of it? Employee-Paid Pre-tax Benefit Option
Yes. This is the employee-paid pre-tax benefit option. If the employer cannot cover the costs of the ECO Program benefit, you can still provide a valuable commuting benefit to your employees. Simply set up a payroll deduction program and permit your employee to exchange part of their gross income for EcoShuttle’s fare. Since the employees pay for the benefit with pre-tax dollars, they save Federal, State and income taxes. The amount of their pre-tax payroll deduction is no longer treated or reported as taxable salary.
The employer wants to help the employees get to work with a sustainable alternative. Can we split the costs of taking the EcoShuttle?
Yes. The third option is for the employer and employee to share the costs. The employer could subsidize part of the EcoShuttle’s fare and allow the employees to pay the balance using pre-tax income. The employer can then purchase the monthly/annual fare using the contributions from the employees salaries and their employer funds, and then distribute the passes to the employees.
The best value for the employees is to arrange for the funds to be taken out of their paychecks before taxes are applied, as a pre-tax benefit. For example, an employer could provide any member who elects to participate in the program half the costs of a monthly ECO Program fare. The employee can then contribute the remaining half of the costs using pre-tax income. The employer receives an equivalent deduction from business income taxes, while the employees save on Federal and State income taxes.
What about Parking? If we currently provide it, do we get any breaks on that?
Many employers provide free or subsidized employee parking. The goal of EcoShuttle is to make it as economical for employee to use alternate forms of transportation. If a company only provides parking and their employees want to take advantage of the ECO Program, establishing a parking “cash out” program may be the appropriate choice. The employee may forgo parking and cash out the value of the parking benefit. The value of the parking benefit is subject to taxes. However, if up to $65 of the value is converted to an ECO Program fare, the amount converted will not be subject to taxes. Should the employee decide to accept the cash instead of the transit benefit, the amount is treated as additional compensation and subject to payroll and income taxes.
Why should I or my company use EcoShuttle’s ECO Program?
EcoShuttle makes great sense. With these new changes in the Internal Revenue Code, there is now a great way to provide employees with a cost-effective, value-added benefit. These changes also provide companies with the greatest flexibility to create a program that works for them and their employees. If there isn’t a budget to provide this employee benefit this year, remember the employee-paid options actually saves companies money and doesn’t require additional funds.
