Pre-Tax Parking Deduction

Information Sheet

Overview

PVAMU is pleased to introduce a new program that allows PVAMU employees to pay for certain employment-related transportation expenses (i.e. Parking Permits) on a pre-tax basis for federal tax purposes.

The IRS limits qualified expenses to those incurred when you park at or near your work location. Only expenses paid by means of payroll deduction are eligible for pre-tax treatment under the new program. Expenses incurred before the period covered by a payroll deduction are not eligible for payment under the program. For example, an employee may not pay for the cost of a parking pass for September with payroll deductions made in the following October.

For 2007, IRS Code Section 132(f) limits the amount of qualified parking that may be excluded from your taxable income to $175 per month for pre-tax parking deduction.

The PVAMU Pre-Tax Parking Deduction Plan allows eligible employees to pay for PVAMU parking permits with pre-tax earnings beginning with parking permits for the period of September 1, 2008 through August 31, 2009.

The PVAMU Pre-Tax Parking Deduction Plan will have no impact on your TRS retirement, the Optional Retirement Plan, or any other paid benefits. However, depending on your salary, your Social Security benefits at retirement may be reduced slightly because you will have paid Social Security taxes on a lower wage. (For more information, you may wish to consult your tax advisor or financial planner.)
Rules governing pre-tax parking plans are set by the Internal Revenue Service (IRS) and supersede the information contained on this web site in the event of any discrepancy.  If you have questions about the plan, contact the payroll office at (936) 261-1904.

Please contact Parking Management Office at (936) 261-1701 or at Parkingmgmt@pvamu.edu or visit us in the Harrington Science Building, Room 117.


Frequently Asked Questions

  1. Who is eligible for pre-tax parking deductions?
  2. How will the PVAMU Pre-Tax Parking Deduction Plan be implemented?
  3. Do I have to enroll in the PVAMU Pre-Tax Parking Deduction Plan? Is it mandatory for all employees?
  4. Can I still use payroll deduction for my parking permit without enrolling in the PVAMU Pre-Tax Parking Deduction Plan
  5. How do I make a change in my pre-tax parking deduction enrollment?
  6. Since the benefit is on a pre-tax basis, are tax-deferred contributions affected?
  7. How do I save with this benefit?
  8. Can I get a refund on my permit if I purchased it using the PVAMU Pre-Tax Parking Deduction Plan?

Who is eligible for pre-tax parking deductions?

This pre-tax benefit is available only through payroll deduction for qualified parking, as defined by the IRS and established by PVAMU.
Those eligible to participate in the PVAMU’s Pre-Tax Parking Deduction Plan are employed by PVAMU in a position budgeted for a minimum of 4.5 months AND at least 50% effort. Participation requires enrollment in payroll deduction for the payment of your parking permit.

How will the PVAMU Pre-Tax Parking Deduction Plan be implemented?

Employees enrolled in payroll deduction for the payment of their parking permits will have to request to be enrolled in the PVAMU Pre-Tax Parking Deduction Plan.  Employees who are not currently paying for these expenses through payroll deduction must authorize a payroll deduction to receive the favorable tax treatment available under this new program. The program will be effective beginning September 1, 2008. After September 1, 2008, participation will be effective with the first paycheck containing a parking deduction.  Your participation will continue from pay period to pay period until you terminate the plan or separate from PVAMU employment.  If you choose to discontinue your participation, you must bring your permit to Harrington Science Room 117 to change your payment option and complete the Prairie View A&M University Pre-Tax Transportation Deductions Cancellation or Re-Enrollment form.

Do I have to enroll in the PVAMU Pre-Tax Parking Deduction Plan? Is it mandatory for all employees?

No.  Enrollment in the PVAMU Pre-Tax Parking Deduction Plan is voluntary.

Can I still use payroll deduction for my parking permit without enrolling in the PVAMU Pre-Tax Parking Deduction Plan?

Yes.  Simply complete and submit to Parking Management Office the Prairie View A&M University Automatic Payroll Deduction Enrollment form.

How do I make a change in my pre-tax parking deduction enrollment?

If you elect to activate your participation in the PVAMU Pre-Tax Parking Deduction Plan, bring photo ID to Harrington Science, Room and complete the Prairie View A&M University Automatic Payroll Deduction Enrollment form for the authorization and the deduction will be activated on the next available pay cycle.  New employees may enroll in the PVAMU Pre-Tax Parking Deduction Plan when the permit is issued.

Since the benefit is on a pre-tax basis, are tax-deferred contributions affected?

If an employee is contributing at or near the maximum amount to a supplemental retirement income (IRC 401(k)), a tax sheltered annuity (IRC 403(b)), or a deferred compensation plan (IRC 457); the employee may need to decline the pre-tax parking benefit or adjust his or her tax-deferred contribution because participation in the pre-tax parking benefit reduces the income available for sheltering under those plans. Social security earnings upon retirement may also be marginally affected due to the reduced social security contribution. Employees should consult their tax advisors with questions.

How do I save with this benefit?

Each month participation employees have dollars deducted from their paycheck, up to a limit set by the IRS, on a pre-tax basis to pay for parking passes or other qualified transportation expenses.  Since these deductions are taken on a pre-tax basis you are saving taxes because you are not paying income or social security taxes on the wages used to purchase parking.  The net effect is that you are buying your pass at a discounted price.  You may save up to 35% depending on your tax bracket, which might mean up to 3 free months of free parking over the course of the year.

An employee’s gross pay will not change, but his/her net pay will increase, due to the lesser amount of pay subject to tax withholding.

Can I get a refund on my permit if I purchased it using the PVAMU Pre-Tax Parking Deduction Plan?

No, federal law prohibits refunds of pre-tax qualified parking deductions.  Employees can stop payroll deductions at any time prior to the month that you want the Pre-Tax Parking Fee Deduction to stop.  It is recommended that your payroll deduction goes through the end of the plan year, or until your academic or cyclical appointment ends each year.

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