Many families find that paying for their nanny’s or senior caregiver’s public transportation pass is a great tax free benefit. Because this is non-taxable, you can provide this nanny transportation allowance without having to pay FICA or unemployment taxes on the value!
For 2024, an employer may reimburse the nanny or senior caregiver for mass/public transit plans, and for qualified parking up to $315/month.
The provision of transit passes by employers to employees, subject to the monthly limits, is a pre-tax benefit. Everyone wins because taxes are reduced for employers as well as employees.
While the legislation clearly intends for the employer to provide the actual transit pass, not a cash advance for its purchase, cash reimbursement is permitted with documentation.
It is important to note that this pre-tax benefit is for public or mass transit only, not private commuter expenses. Rail, bus and van pool are qualified employee travel allowance alternatives.
Any reimbursement of commuting expenses for gas or tolls is taxable income to the nanny or senior caregiver.
» Nanny and Senior Caregiver Non-taxable Benefits
» IRS Guidance: Transportation Fringe Benefits
