Monday, September 4, 2017

Make the most of Commuter Benefits!!!

There are certain times of year that I stop and review my financial game plan.  One of those times is the top of September, when school starts.  I review several things: payroll allocations, debt repayment strategies, savings strategies, and several other things.

When it comes to reviewing payroll allocations, one thing that I do is revisit the HR part of my company's website.  I take a look at the benefits that are offered to me, and make sure that I am actually taking advantage of everything that could possibly benefit me.  Maybe that seems like a silly thing to do, but sometimes, I realize that I'm leaving money on the table.

One really common benefit that gets missed is the Commuter Benefit.  Different companies call this by different names, but it can add up to some serious dough!  Don't worry, it happens to all of us.  In fact, I realized that there was a Commuter Benefit that I could be taking advantage of, but had missed.

Here's the way it works with my employer.  I sign up for the benefit, and select a monthly dollar amount.  I live in NYC and take mass transit.  My monthly pass is $121.  Occasionally, I take a bus or train that requires a separate fee.  So, I am going to choose $130 as my monthly dollar amount.  Once I plug that number in, I will be sent a "debit card," that gets loaded with that amount each month.  The money comes out of my payroll BEFORE taxes.  When I purchase my pass each month, I simply pay for it using the debit card associated with my commuter benefit.

You might be asking yourself, "What's so special about that?  I'm still paying for my own pass with my own money!"  It's the pre-tax aspect of this benefit that is actually saving you money.  Over the course of the next year, $1560 will come out of my paycheck on a pre-tax basis in the form of this commuter benefit.  On my income taxes, it will appear to Uncle Sam that I made $1560 less.  In other words,  I won't be responsible for the taxes on this dollar amount.  If Uncle Sam has a tendency to keep 20% of my earnings for taxes, the savings is easily over $300.  Now, I just did some really straightforward math, and we all realize that your taxes are never completely straightforward, but you get the point right?

Now, when I lived and worked in Oregon, my employer offered a commuter benefit to anyone that didn't drive a car to work.  I think it was $50.  They technically called it a Carpool Benefit, but the truth is that any employee car pooled, rode a bike, walked, or took mass transit qualified for it.  Yet another company that I worked for offered a Mass Transit Benefit; they would reimburse employees the dollar amount of their monthly metro pass provided that was the manner in which they commuted to work.

Regardless of the details, if your employer offers some sort of Commuter Benefit that you qualify for, and you are not taking advantage of it, you are leaving some serious money at the table!

Does your employer offer a commuter benefit of some sort?  If so, how does it work?  Are you able to take advantage it?

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