Pre-Tax Parking Program
About the Program
The Internal Revenue Code allows the University to offer a Pre-Tax Transportation Payroll Deduction Program for parking expenses. Under this program if you sign up for payroll deduction for parking, the amount of the deduction will not be included in your gross income for the computation of Federal or State income taxes or Social Security taxes. The amounts will not be included as taxable income on your W-2 form.
Parking Deductions
At UW Madison parking is very limited. Employees interested in parking in a UW Madison owned parking lot should contact their Unit Parking Coordinator in their department or division.
- A list of coordinators is available on Transportation Services website at: http://www.fpm.wisc.edu/trans/NavigationBar/Directory/UPC.htm
UW Madison offers a program entitled "flex parking". The fee for this parking is not payroll deducted on a pre-tax basis, however, the cost of this parking can be processed through the Commuter Benefits Program.
- See more information on the Flex Parking program at: http://www2.fpm.wisc.edu/trans/TDM/Flex.html
- See more information on the Commuter Benefits Program at: http://www.bussvc.wisc.edu/ecbs/emp-pretax-commuter-ben-menu.html
If an employee is allocated a parking permit, they can then specify whether they want the payment for the permit to be payroll deducted on a pre-tax or post-tax basis. Most all employees benefit from having this deduction taken on a pre-tax basis. If an employee does not want to have the deduction taken pre-tax, a Waiver must be filed.
- The Pre-Tax Transportation Program Waiver (UW1079) can be printed from the website at: http://www.bussvc.wisc.edu/ecbs/pay-uw1079-pretax-waiver.pdf
Deduction Limits
There is an IRS limit on parking expense. For the year 2008, an employee may exclude from income up to $220 per month. Parking expenses that exceed this limit will automatically be taken on a post-tax basis, meaning that a portion of the combined deductions will be subject to Federal and State income taxes and Social Security taxes.
Deduction Schedule
Parking deductions are taken over a 9-month period. The first deduction is taken in September and the last deduction is taken in May.
Refunds
If you cancel participation and money has already been deducted for parking, there are no refunds. The Internal Revenue Code prohibits refunds to participants.
Refunds will be issued if parking is cancelled during the year and you had signed a Waiver, or if you paid by check or credit card. The amount of refund depends on the timing of the cancellation.
Impact on Benefits
The pre-tax transportation deductions could have an effect on your social security benefit since your earnings reported for social security purposes will be lower. In most cases there is no effect on your social security benefits because your social security earnings used to compute your benefits is an average of the earnings over your working career.
There is NO EFFECT on your earnings reported to the Wisconsin Retirement System or on the computation of any other benefits such as sick leave conversion credits, income continuation insurance, life insurance, unemployment or workers compensation benefits.
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