Federal transit benefits raised to $245 per month, retroactive payments clarified

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Photo - A metro train arriving at Farragut North Metro station, Monday, October 10, 2012
A metro train arriving at Farragut North Metro station, Monday, October 10, 2012
Local,Transportation,Kytja Weir

Transit riders will be able to receive even higher federal transit benefits -- and get back money for last year's transit costs.

The Internal Revenue Service has adjusted the maximum transit and parking benefits for up to $245 per month from $240 to take into account inflation. That comes after Congress raised the limit earlier this month for transit riders from $125 per month to $240 per month to match parking benefits as part of the "fiscal cliff" deal.

The IRS also issued guidance to employers on how to pull off a puzzling aspect of that legislation, which called for making the $240 transit benefits retroactive for 2012.

That means transit riders can get more money this year but also claim retroactive benefits for all of 2012 and likely for the beginning of 2013, when the amount was slightly lower.

It's good news for transit riders. But it's a headache for the human resources, payroll and tax staff at private companies around the region, according to Jody L. Dietel, the chief compliance officer for WageWorks, which administers such benefits for companies nationwide.

Employers will need to refile all the paperwork to adjust the amounts for each employee after the payroll cycle for 2012 has closed. "Employers are in a quandary. Most employers have already produced W2s," she said. "The reality is this was passed way too late."

Federal agencies are a separate question. They typically give the benefits outright to employees but would need money appropriated to pay the difference, she said.

Transit riders wanting to claim the retroactive amounts probably will need to push their employers to work out the details. But Dietel cautions that riders are not going to get a windfall even if they do. The total amount riders could receive if they received pretax deductions for 2012 equals less than $78 on their FICA payments, plus a slightly lower taxable income for 2012, she said. And it's relevant only for people making less than $110,000.

But moving forward with the higher $245 amount for coming months should be more straightforward. Long-haul Metrorail riders who ride more than a single round-trip each weekday will benefit. It will be especially helpful, though, for commuter train riders in the region. A monthly pass on VRE, for example, can cost as much as $294.10, while MARC trains can cost up to $350 a month. If those riders take Metro once they arrive in D.C. -- or buses to get to the commuter train stations -- they face additional costs.

kweir@washingtonexaminer.com

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Kytja Weir

Staff Writer - Transportation
The Washington Examiner