Business Services Industry
Employees can reduce their salaries to pay for parking.
Kiplinger Tax Letter, The, February, 2000
Employees can reduce their salaries to pay for parking at work. The Service has issued regulations allowing salary reduction agreements of up to $175 a month to cover the parking expenses that employees incur. Employees save taxes because their income is lower. Employers benefit too because they pay less social security and medicare taxes on reduced pay.
Salary-reduction elections must be prospective, according to IRS. Employees cannot reduce their pay to reflect parking previously paid for.
And any agreement to decrease salary must be made in writing.
Similar rules apply to mass-transit passes...employees can agree to cut their pay by up to $65 a month for commuter farecards, tokens, etc. The IRS won't require recipients to substantiate...
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