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Transportation Services Demystifies Pretax Transit Benefits

By Helen Block
While there are certain advantages of driving to work, such as freedom of movement, the disadvantages of spiking gas prices and rising costs of insurance, repairs and parking in San Francisco don’t exactly make driving a car a bargain. But using more than one mass transit system can also add up. This is where the Transportation Equity Act for the 21st Century comes in to play. To put it simply, in 2002, UCSF became the first UC campus to allow all employees, within limits, to authorize taking money out of their paychecks now, before taxes are deducted, to pay for transportation in the next month. This lowers the paycheck a bit, thereby lowering the employee’s payroll taxes. It also lowers the University’s payroll taxes slightly. Essentially, this is the same program that UCSF employees use for their health care coverage. Pretax benefits for UCSF employees are made possible, in part, thanks to the work of Robert Wong and Kevin Cox, both of Campus Life Services’ Transportation Services, and Sustainability Manager John Pihl of Capital Programs & Facilities Management. To sign up to authorize a payroll deduction, employees must complete the Pre-tax Action Form and return it to UCSF Transportation Services via campus mail at Box 0299, or fax it to 415/476-0499. Those who need assistance can call the Transportation Pretax Coordinator Kevin Cuevas at 415/476-1511. Employees can deduct only the costs of getting to and from work, and should keep their transit receipts and Fast Passes as proof of commuting to any UCSF campus. While they don’t need to submit these monthly, there is a chance of a spot audit. Employees then need to authorize a post-tax deduction of $3.39 a month for their claims to be submitted and processed online through the company HR Simplified, Inc. To date, 1,610 people use the pretax transit program. Transportation Services would like to get that figure up to 2,000 this year. These pretax deductions reduced a small portion of UCSF’s payroll taxes (about 7 cents for each dollar of pretax deduction), resulting in UCSF’s avoiding around $117,000 in annual payroll taxes in the past 12 months. Additionally, pretax participants also save by not being taxed on the amount they deduct. UCSF employees saved $420,000 in 2008. In fact, the American Recovery and Reinvestment Act of 2009, which was signed into law this week by President Barack Obama, includes an increase of the maximum monthly election limit for transportation benefits from $120 to $230, the same as that for parking. This increase is available beginning March 1 and will continue through Dec. 31, 2010. Since some people find hanging on to paper receipts a bit bothersome, Transportation Services is working on the option of a dedicated debit card that will automatically credit the participant’s pretax deduction each month. Participants can then use this card to pay for public transit, instead of needing to request reimbursement. “This is a definite win-win for all parties involved – that is, both the user and UCSF as the employer,” Cox says. “It helps with day-to-day sustainability and greening your life in a cost-saving way.”

Related Links:

Pre-tax Transit Incentives
UCSF Transportation Services

Pre-tax Transit Incentives: FAQs

Pre-tax Action Form

HR Simplified, Inc.