The Internal Revenue Service has provided guidance on the monthly transit benefit that was extended in the fiscal cliff deal earlier this month and how employers who paid more than the maximum exclusion limit can fix the discrepancy.
Section 132(a)(5) of the Tax Code provides that any fringe benefit that is a qualified transportation fringe can be excluded from gross income. A qualified transportation fringe benefit provided by an employer to an employee can include any transit pass, transportation in a commuter highway vehicle between home and work, and qualified parking.
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