Commuter benefits help pay for qualified commuting expenses with pre-tax money—not to be spent on health expenses.
If your commuter benefits are managed by Gusto, you will be issued a Gusto Benefits Card to pay for qualified transit and parking commuter expenses.
Some public transit stations may sell miscellaneous items like newspapers, coffee, parking passes, etc. These expenses are unqualified expenses. If your card is declined, you can submit a claim to get reimbursed for qualified expenses only.
Types of expenses
|Qualified transit expenses||Qualified parking expenses||Unqualified expenses|
|Bus||Parking garages||Car maintenance|
|Ferry||Parking space provided by your employer||Parking that isn't part of your commute|
|Uber Pool/Lyft Line (only in select cities)|
The maximum pre-tax election for transit and parking contributions in 2022 is $280/month, regardless of the balance you may have on your card. For 2023, the contribution limit has increased to $300/month.
Here are some quick tips on how to use the funds in a commuter benefits account:
Post-employment: Commuter benefits are terminated on an employee's last day of employment. They'll have 90 days to submit a Gusto Benefits Card claim for services incurred while the policy was active. Claims can be submitted for out-of-pocket transit expenses only if the first attempt was made with the Gusto Benefits Card and the transaction was denied. Any unused funds will be forfeited back to the company, which is a regulation set in place by the Section 1.132-9(b) Q&A 14(d) of this IRS document.
Transferring funds between accounts: Funds can't be transferred. Parking accounts are for parking, transit accounts are for transit, and the funds cannot be transferred between the two.
Unused funds: The money rolls over each month and accumulates, but you can only spend up the the IRS maximum each month ($280 in 2022 and $300 in 2023), even if you have more than that in your account. Any funds left over after the policy is terminated or the employee leaves the company expire 90 days after the termination date.
Click here to use your Gusto Benefits Card Manager account to view transactions, balances, submit claims, and more.
Commuter benefit funds can be used on either transit or parking expenses, by swiping your card or using your card number for an online purchase. If purchasing online, the billing address is your home address.
Remember: the IRS monthly maximum is both a contribution and usage limit. This means you can only contribute up to the limit each month, and you can only spend up to the limit each month.
You can use transit funds to commute between your home and primary place of work.
You can use parking funds to park at your primary place of work or at your transit location.
Commuter benefits help employees pay for qualified commuting expenses with pre-tax money. To have commuter benefits with Gusto, you must have health insurance with Gusto. If you already offer commuter benefits and manage them externally, you can set up deductions for payroll.
Set up commuter benefits in Gusto
You can start offering commuter benefits to your team anytime by following these steps:
Once you’ve finished adding the commuter benefits, we'll email you with the effective date and your employees will be notified to enroll. Unlike most other benefits, your team can enroll in, cancel, or change their commuter benefit elections anytime throughout the year.
Depending on how the policy was set up, full-time, part-time, seasonal, and variable employees can be eligible for commuter benefits. Commuter eligibility is separate from medical eligibility. You can choose to offer commuter benefits to any employment class (including full-time, part-time, variable, and seasonal).
If you’d like to change your company’s commuter eligibility restrictions, please reach out to our team for assistance.
Owners taking owner’s draws and 2% or greater shareholders of an S Corporation are not eligible to participate in commuter benefits.
Eligible employees can enroll in commuter benefits anytime.
For first-time enrollees, the cutoff to enroll is the 10th of the following month (ex: enroll by July 10th for August benefits). After their initial enrollment, employees have until 2 days before the end of each month to make changes for the following month (ex: make changes by January 30th for February benefits).
Commuter benefits cards will be sent in the mail before the benefits start.
You can change your commuter benefit elections at any time once your benefit is active. If this is your first enrollment and you've already submitted the amount, please reach out to our team at [email protected] to make the change.
Changes must be submitted 2 days before the last of a month in order to take effect on the first day of the following month. For example, if you want changes to take effect May 1st, you must submit your change in Gusto by April 28th.
To make changes:
You can cancel your commuter subscription at any time. If you have a current balance, you will have 90 days after you end the policy to submit claims for services incurred while the policy was active. After the 90 days, any remaining funds will be forfeited to the company and are not reimbursed—even if they were employee-funded.
To avoid forfeiting the funds, reduce the contribution amount instead of canceling the enrollment. This buys you time to use the balance in the account before terminating the policy, without having to put much more money in it.
You'll need to reach out to our team directly to cancel your commuter benefits.
The termination will be at the end of the current month. Here are things to keep in mind: