Solo W-2: Tax-free Commuter Benefit for Mass Transit

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Tax Savings & Corporate Benefits
for Independent Professionals

Solo W-2™ — Tax-free Commuter Benefit

	Save Money While You Save the Environment

		Internal Revenue Code Section 132 and the Transportation Equity Act for the 21st Century (TEA-21) allow employers to provide tax-free reimbursements to employees for certain qualified commute travel expenses.

		This transportation fringe benefit is only available to employees and is not available to self-employed professionals, including sole proprietors, partners, independent contractors and owners of S-corporations who own 2% or more of the shares. This tax-free commuter benefit is another great example of the advantage of Solo W-2™ employment over self-employment.

		Solo W-2, Inc. has added the Tax-Free Qualified Transportation Fringe Benefit to our suite of reimbursed business expenses. This benefit will allow reimbursement of commute travel for: Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and work location. (additional IRS requirements apply) Any Transit Pass Qualified Parking on our near the employee’s work site or location from which employee uses commuter transit or a commuter highway vehicle, as long as it is not also for residential parking purposes. (i.e. working from home)

		Solo W-2, Inc. will reimburse employees for the actual cost of items (a), (b) and (c) up to the IRS maximums listed below: $115 per month for item (a) and/or item (b) $220 per month for item (c) For someone who drives to a paid-parking facility and then travels to work using a commuter highway vehicle or transit pass, the maximum monthly covered amount will be $335. These rates will be adjusted whenever the IRS updates the maximum rates.

		Please note: The IRS does not allow tax-exempt reimbursement for local commute mileage – only for commute mileage away from the employee’s normal work location when working at a remote work site.

		Note also: Solo W-2, Inc. reimburses non-commute, business-related mileage with tax-free dollars at the IRS maximum rate of $0.505 per mile in 2008.

		When entering in your new benefit online in the secure Members Section of the web site, select: Travel – Commute (max $115 per month) for item (a) and/or item (b) Travel – Qualified Parking (max $220 per month) for item (c) To qualify for this benefit, employees must submit receipts and documentation detailing their commute and/or parking each month.

How is The Commuter Benefit Tax-free?

When your Solo W-2™ division reimburses you for your qualifying commuter expenses, the payment is exempt from the following taxes:

Employer Taxes

Employee Taxes

Social Security
(6.2%)

Social Security
(6.2%)

Medicare
(1.45%)

Medicare
(1.45%)

Federal Unemployment
(0.8%)

Additional State Taxes
(% varies by state)

State Unemployment
(% varies by state)

State Income tax
(varies)

Workers Compensation
(% varies)

Federal Income tax
(varies)

Additional State Taxes
(% varies)

Depending on your tax situation, your tax savings from the Solo W-2™ commuter benefit will equal your tax bracket plus the employer’s and the employee’s share of payroll taxes, which in most cases will effectively cut your commute costs by one-third to one-half of the covered amount.

	This Sounds Great! How Do I Get Started?

		Simply contact your Division Administrator for assistance. Your Division Administrator will guide you through the process. Saving hundreds of dollars on your taxes and saving the environment could not be easier.