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Does your employer offer a Transportation Spending Account?
This is an account where you can elect a certain amount of your gross pay to be taken out each paycheck for mass transit expenses (bus or train). You then apply to get the money back. What this does is it lowers your taxable salary (and we love tax savings!). The money you elect to take out isn’t taxed.
Thanks to Obama’s Economic Stimulus (the American Recovery and Reinvestment Act) the limit on the Transit account has been raised from $120 a month to $230 a month for 2009 and 2010. This should be rolling out from employers now (if not give your benefits department a shout and make them aware).
Why should you take part in a Transit Account?
For 2009 that leaves us 10 months to take advantage of this benefit. Assuming you can declare the maximum $230, that’s $2300 to lower your taxable income.
Let’s see the savings per tax bracket (Single Taxpayer):
That’s a nice little bit of money for not so much work!
Keep in mind though this is something you would have to opt in to! You don’t automatically get this money (if you weren’t already taking part this year you may not be able to opt in until next year)!
I can’t say how well this will be broadcast to the public besides what’s already been put out there in the news. Make sure you take advantage of this tax advantage!
26th February 2009