By Bill Olson, Chief Mar­ket­ing Offi­cer at Unit­ed Ben­e­fit Advisors

On Decem­ber 10, 2014 the IRS released the option­al stan­dard mileage rates for 2015. Begin­ning on Jan­u­ary 1, 2015, the stan­dard rates for the use of a car, van, pick­up or pan­el truck are: guage

  • 57.5 cents per mile for busi­ness miles, up from 56 cents in 2014
  • 23 cents per mile for med­ical or mov­ing pur­pos­es, down half a cent from 2014

Tax­pay­ers may instead claim deduc­tions based on the actu­al costs of using a vehi­cle rather than the stan­dard mileage rates if they prefer.

The Tax Increase Pre­ven­tion Act of 2014 (TIPA) retroac­tive­ly increas­es the 2014 com­bined lim­it for tran­sit pass­es and van­pool­ing ben­e­fits pro­vid­ed under a qual­i­fied trans­porta­tion plan to equal the $250 per month lim­it for qual­i­fied park­ing ben­e­fits.  This increase only applies to 2014 – for 2015 the lim­its for tran­sit pass­es and van­pool­ing ben­e­fits will again reduce to the pre-TIPA lev­els of $130 per month for tran­sit pass­es and $25 per month for qual­i­fied park­ing unless Con­gress pass­es anoth­er exten­sion bill.

Because this increase occurred so late in the year, it is of lim­it­ed val­ue to most employ­ers and employ­ees. Employ­ers able to take advan­tage of the increased lim­it have raised ques­tions about how to han­dle and report it. On Jan­u­ary 9, 2015 the IRS issued Notice 2015–2.  This notice pro­vides a spe­cial process for employ­ers that pro­vide addi­tion­al tax-exempt ben­e­fits to make cor­re­spond­ing adjust­ments to Fed­er­al Insur­ance Con­tri­bu­tions Act (FICA) with­hold­ing and report­ing.  Any excess with­hold­ing of fed­er­al income tax will not be adjust­ed by the employ­er, but may be claimed by the employ­ee when the Form 1040 is filed. The Notice states that employ­ers may not sim­ply con­tribute or allow employ­ees to con­tribute amounts above the month­ly lim­it to recoup the 2014 amounts. Employ­ers may use the nor­mal refund process that applies when FICA is with­held in error if they prefer.

For more infor­ma­tion on this Notice, down­load UBA’s PPACA Advi­sor, “IRS Pro­vides Process to Address Retroac­tive Increase in Exclud­able Tran­sit Benefits”.

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