Lindquist, von Husen & Joyce LLP.

  • About
    • Mission & Values
    • Leadership
    • BKR International
    • Our History
  • Services
    • Audit & Attestation
    • Tax
    • Business Advisory & Other Services
  • Expertise
    • Affordable Housing & Real Estate
    • Not-For-Profits
    • Individuals & Families
    • Closely Held Businesses
    • Client Success Stories
  • Resources
    • Blog
    • Tax Guide
    • Tax Calendar
    • Financial Tools
    • IRS Forms
  • News & Events
    • Firm News
    • Events
    • Industry News
  • Careers
    • Benefits
    • Professional Development
    • Life at LvHJ
    • Meet Our People
    • Open Positions
  • Contact
  • Client Portal

Client Portal

Forgot password?

Important Tax Update for Qualified Transportation Fringe Benefits

May 29, 2018   |   Posted in: Tax Laws

by Stanley Woo, CPA

Due to the changes in the Federal tax law brought on by the 2017 Tax Cuts and Jobs Act, the transportation fringe benefits provided by an employer to employees are no longer deductible by the employer. This change in the law will impact employers in the for-profit sector and surprisingly, employers in the not-for-profit sector.

For non-profit organizations, the transportation fringe benefits provided to employees are now reportable as unrelated business income. The nonprofit employers will have to pay a 21% Unrelated Business Income Tax (UBIT) on Qualified Transportation Fringe Benefits (QTFB) provided to employees starting January 1, 2018.

Qualified Transportation Fringe Benefits would include the following provided by an employer to an employee:

  • Transportation in a commuter highway vehicle
  • Transit pass
  • Qualified parking
  • Qualified bicycle commuting reimbursement

Employers will still be able to provide QTFB to employees up to $260 per month for 2018 without any tax effect on the employees.  The costs of providing QTFB, whether through a pretax cafeteria plan or paid directly by the employer are subject to the 21% UBIT.  The effective date of this change is January 1, 2018 regardless of the nonprofit’s fiscal year. 

Nonprofits that will be subject to UBIT should consider making estimated tax payments.  Estimated tax payments are required when total estimated tax for the tax year is $500 or more.  If a nonprofit has not previously paid federal income taxes, it will need to enroll in the Federal EFTPS payment system to remit its tax payments. 

Nonprofits that will be subject to UBIT will be required to file Federal Form 990-T, Exempt Organization Business Income Tax Return.

California has not yet conformed to the changes in the Federal law.  Therefore, for state tax reporting purposes, QTFB will not be treated as unrelated business income until there is state conformity.

Find more about tax law changes to fringe benefits with our 2018-2019 Tax Planning Guide. 


Recent Posts

  • Make your Nonprofit Stand out on National Day of Giving
  • Maintaining Not-for-Profit Compliance and Tax-Exempt Status
  • Tax Reform Impact for Closely-held Businesses
  • Nontraditional Funding Methods for Not-for-Profit Organizations
  • Government Grants: Exchange or Contribution? It Depends.

Categories

  • Affordable Housing
  • Business Advisory Services
  • Case Studies
  • Charitable Giving
  • Individual Tax
  • Not For Profit
  • Tax Laws

Archives

  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • June 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017

Tags

board management charitable donations compensation major gifts succession tax tax reform

Connect with us on

  • About
  • Services
  • Expertise
  • Resources
  • News & Events
  • Careers
  • Contact
  • Client Portal
©2019 Lindquist, von Husen & Joyce LLP. All Rights Reserved.