How is this possible? Pay out money for a fringe benefit and pocket more after-tax cash. Yes, paying a transportation fringe benefit can result in more cash to your bottom line.
Tax law allows the employer to ask the employee if he would like the transportation benefit rather than additional salary. If the employee currently pays for parking, transit, commuter transportation, or bicycling to work, the transportation benefit is far superior to additional salary.
You can get the benefit for yourself if you operate as a C corporation. Your C corporation, the employer, can offer this benefit to you, the employee.
When the employer makes this proposal, here is what he says to the employee: “Would you like to pocket an extra $1,840 this year?” Here is what the employee is going to say: “Yes, but what’s the catch?”
No catch! Say the employee currently spends $230 a month to park his car near the office. That’s $2,760 a year. Let’s say ... Log in to view full article.