Table of Contents
Questions on Qualified Transportation Accounts QTA
Enrolling in QTAs
Questions on Qualified Transportation Accounts
- What is a Qualified Transportation Account?
A Qualified Transportation Account, also called a "QTA," is like a personal bank account in which you can set aside an amount of money on a tax-advantaged basis to cover qualified transportation and parking expenses incurred to and from your place of work. Within a QTA, there are two subcategories: a Mass Transit Account and a Parking Account.
- How is a QTA funded?
You contribute to a QTA through payroll deductions. Your deductions can be made on a pre-tax basis, which means before taxes, FICA, and Medicare are taken out of your paycheck
- How much money can I set aside in my account on a pre-tax basis?
For 2010, you may contribute on a pretax basis up to $230/month into the Mass Transit Account if you have qualified mass transit expenses, and $230/month into the Parking Account if you have qualified parking expenses, on a pre-tax basis. (These limits are set by the IRS and are reviewed annually so be sure to check your benefit plan design). Should your monthly expenses for transit or parking be higher than these amounts, your employer may allow you to contribute additional funds on a post-tax basis be sure to check your employer’s benefit plan design. Money from the parking account cannot be used for mass transit expenses, and vice versa.
- Can I participate in both accounts/categories?
Yes, if you have qualified expenses in both categories and your employer offers both.
- Why should I participate in a QTA?
You save money on expenses you would incur any way by contributing to the QTA monthly and on a pre-tax basis up to the 2010 IRS-imposed maximums of $230/month into the Mass Transit Account and $230/month into the Parking Account. And the Prepaid Benefits Card makes using the QTA simple!
In one conservative example, let’s assume an individual in the 28% federal income tax bracket pays $1,200 qualified transit and parking expenses out of a QTA doing so would save $336 in taxes! The Prepaid Benefits Card makes accessing the funds simple and automatic!
- What transportation expenses may be reimbursed through a QTA?
The IRS defines qualified transportation expenses as expenses that are necessary for you to travel to and from work, including parking, mass transit and commuter highway vehicles.
Please see IRS Publication 15-B [PDF] for details on what expenses are eligible to be reimbursed. Always check your employer’s benefit plan material.
Examples of qualified out-of-pocket transportation expenses that can be paid for with a QTA include:
- Parking expenses for any type of vehicle on or near your work location
- Parking on or near a location from which you commute using mass transit
- Transit passes
- Transit tokens
- Transit farecards
- Transit vouchers
You can use the Prepaid Benefits Card for all these, thereby stretching your dollar and making it easy to do so!
- What transportation expenses cannot be reimbursed through a QTA?
Some examples of ineligible transportation expenses are:
Carpooling with a neighbor
Transportation and/or parking expenses to attend leisure events
Expenses incurred by your spouse and/or dependents in connection with their commutes
Mileage and gas expenses associated with going to and from work
Always check your employer’s benefit plan materials.
- Can I change my contribution amount during the year?
Yes, since the QTA is a monthly election, you can change your amount or stop contributions at any time throughout the year. Retroactive changes are not allowed, only changes that will affect future months are allowed. Be sure to check your employer’s benefit plan design.
- What happens if I don't use all the money in my QTA?
Funds can be rolled over from month-to-month and to a new plan year, so check your employer’s benefit plan design.
The Prepaid Benefits Card allows for real-time access at transit and parking locations for amounts you’ve contributed to your QTA. So the Card makes it easy to use your QTA and keep track of your balance. Go to the web site on the back of your card for more information and to check balances.
- Can I still benefit from a QTA if I don't itemize deductions on my tax return?
Yes. You don’t need to itemize deductions to take advantage of this benefit.
- Can I deduct the expenses on my tax return that are reimbursed through a QTA?
No. You cannot claim a tax deduction for the same expenses that are reimbursed tax-free through your QTA.
- When are funds available to me, and when can I start using my Prepaid Benefits Card?
QTA funds are only available if they have been deducted from your payroll. For example, suppose you elect to contribute $50 per month and your employer deducts those funds in two equal installments over the first two pay periods of the month. After your first pay period, you would have only $25 of your $50 monthly election available. After your second pay period, an additional $25 would be available. Because of this rule, you cannot use the Prepaid Benefits Card until you have "saved" enough money in your QTA to pay for the first expense you will incur.
- If your monthly parking or transit expenses are higher than the IRS limits and your employer’s plan permits it,, you should elect to contribute additional post-tax dollars to your QTA. The Prepaid Benefits Card can only authorize a payment if sufficient funds are in the account. So, for example in 2010, if your monthly commuter rail pass costs $240, you would elect to contribute $240/month to your pre- and post-tax accounts. The first $230 would be pre-tax and the additional $10 would be post-tax. The Prepaid Benefits Card could then be used since there would be sufficient funds on the card to cover the transaction.
- If you save up several months of contributions to purchase a multi-month (e.g. quarterly) transit or parking pass, that single transaction could exceed the dollar limit for the month. For example, you might wish to purchase a quarterly parking pass for $300. In that case, you would elect to contribute $100/month on a pre-tax basis. You would save three months worth of contributions in your account and use them to purchase your parking pass for the following quarter. Since the amount of the transaction ($300) would be higher than the IRS monthly limit, you may be asked to send in a copy of your receipt to document that the pass being purchased covers more than one month.
- What if I pay for eligible expense a month in advance?
Many transit and parking passes are payable in advance. Simply save up one month’s worth of contributions into your QTA. Once you have saved enough, just use your Prepaid Benefits Card to pay for the next month’s pass. For example, you can purchase a transit pass for the month of March in late February, as long as there is enough money in your account to pay for the pass. Then, your March contributions into the account can be used near the end of the month to pay for your April pass, and so on.
- What happens if a QTA expense is quarterly?
Simply save up three months worth of contributions in your QTA, then begin paying on a regular basis each quarter. If the amount of the quarterly expense is higher than the IRS monthly limit, you may be asked to send in a copy of your receipt to document that the expense covers more than one month.
- Will I ever need to submit a paper claim form?
You may need to submit a claim form - along with the receipts if:
- Your transportation expense is incurred at a location that does not accept MasterCard® or Visa®
- You forget to take your Prepaid Benefits Card with you
- Your transaction is denied for any reason
Be sure to check your employer’s benefit plan design.
- Where do I get a claim form?
When using the Prepaid Benefits Card, you usually don’t need a claim form. However, if for some reason you don’t use the Prepaid Benefits Card, contact your Plan Administrator at the phone number on the back of your Card to obtain a claim form.
- What happens if I incur an expense and my QTA balance is less than the amount of the expense?
If the amount of payment you seek to make using the Prepaid Benefits Card is greater than your QTA balance, the card request will be denied. You need to limit your card request to the amount in your QTA and pay the remaining amount with another method. If allowed by your employer, you can avoid having this happenby contributing enough funds each month (pre- and post-tax, if necessary) to cover your monthly transit or parking expenses.
- If I run out of money in my parking account, can I pay for additional parking expenses with money from my transportation account?
No. The two funds are separate and you cannot transfer funds from one account to another.
- If I stop participating, what happens to the money left in my acccount(s)?
You can submit claims for expenses that were incurred while you were a participant. However, any other funds will be forfeited.
- What happens if I terminate my employment?
Upon termination you will have a specific amount of time dictated by your employer’s benefit plan design to file claims on the unused balance in your account. You may submit for reimbursement for services provided prior to the termination date. Any unused funds after that employer-defined amount of time will be returned to the employer. Per IRS guidelines, these funds are non-refundable to the employee.
- Can I use this account to pay for my spouse's transportation and/or parking?
No. The transportation benefit is only for the employee who works for the employer offering the QTA.
- How do I know how much is in my account?
You can visit your Account Summary page at the web site on the back of your card and view your account activity and current balance. Or, you can call your Plan Administrator at the phone number on the back of your card to obtain your current balance. It's a good idea to know your account balance before you make a purchase with the Prepaid Benefits Card.
Enrolling in QTA
- How do I enroll in a QTA?
Just complete the Enrollment Form provided by your employer and indicate the amount you want deducted from each paycheck for each account parking and/or transportation.
- When can I enroll in a QTA?
You may be able to enroll in the QTA at any time during the year but check with your employer as this depends on the particular benefit plan design.