IRS guidance on how to apply the retroactive increase for monthly transit benefits in 2014 is now available for employers. As announced in December, the monthly exclusion for combined commuter highway vehicle transportation and transit passes was retroactively increased from $130 to $250, until January 1, 2015.
The guidance provides a special administrative procedure for certain employers that treated “excess transit benefits”–i.e., in excess of $130 and up to $250–as wages and did not yet file their fourth quarter Form 941 for 2014 (due February 2nd). Employers that already filed the fourth quarter Form 941, or that have not repaid or reimbursed employees prior to filing the fourth quarter Form 941, must use Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund, and normal procedures (described in the guidance) to make an adjustment or claim a refund for any quarter in 2014.
Notice 2015-2 explains both the special administrative and normal procedures in more detail, and provides employer instructions for Form W-2.