At the University of New Haven, eligible employees are allowed to purchase parking permits. All purchases are through payroll deduction. Employees have a choice of having their parking permit deductions computed on a pre-tax or post-tax basis. Parking permits are available to employees on a pre-tax basis under the IRS qualified transportation fringe benefit rules.
Since participation in the pre-tax plan will reduce the amount of an employee's taxable compensation, there could be a slight decrease in the employee's future social security benefits, which are based on taxable compensation.
Eligible employees who elect to participate in the Campus Parking Plan must fill out the Campus Parking Plan Payroll Deduction Enrollment / Waiver & Cancellation Form (PDF). The Campus Parking Plan Payroll Deduction Enrollment / Waiver & Cancellation Form should be submitted to campus police, who will match up the form with your online enrollment and then pass the form to the payroll department.
Questions and Answers:
1. What is the meaning of pre-tax?
Pre-tax means that the cost of the employee's parking permit will be deducted from gross pay (up to the IRS established limit) before state and federal taxes are calculated.
2. Who can participate in the pre-tax plan?
At this time only full-time faculty and professional / practitioners-in-residence (PIR's) will be offered an option to park on campus.
3. How does an employee enroll in the pre-tax plan?
All parking deductions will be made by default on a pre-tax basis unless the employee signs a waiver form indicating that he or she has chosen to opt-out of the Plan. If an employee chooses to opt-out, payroll parking deductions will be made on an after-tax basis. Employees may change this election for future parking deductions during the two open enrollment periods between August 12th through August 18th and December 1st through December 15th each year.
4. What tax advantages are available through the pre-tax plan?
This benefit could result in savings to individual employees by reducing the amount of federal and state taxes withheld from his/her pay. The employee can reduce the amount of pay subject to income and FICA tax withholdings, and increase his/her spendable income. An employee's gross pay will not change, but his/her net pay will, due to the lesser amount of pay subject to tax withholding. Savings will vary depending on the effective tax rate of the employee.
Sample Calculation of Pre-Tax Savings
The reduced tax withholdings for federal income, state income, and FICA taxes will occur as the cost of the parking permit is paid. The employee's pay subject to tax withholdings would decrease by the amount of the parking permit deduction each semi-monthly pay period.
| After-Tax Option
|| Pre-Tax Option
| Gross Annual Pay
|Less Pre-tax Cost of Parking Permit||0.00||200.00|
| Taxable Pay (TP)1
| Federal Income Tax (15% x TP)
|State Income Tax (5% x TP)||2,500.00
| FICA (7.65% x TP)
| Total Taxes2
| Gross Pay less Taxes
| Less Actual Cost of Parking3
| Spendable Income
| Savings from use of Pre-tax Option
1 Taxable pay equals gross pay minus $200, the cost of the parking permit in this sample calculation. The taxable pay reduction for tax calculation purposes does not apply unless the parking benefit is chosen.
2 Actual tax rate depends on many factors. The sample calculation uses the lowest federal tax rate of 15%.
3 The sample calculation uses a parking permit rate of $200.
5. The yearly parking permit fee is $200.00. When and how much will be deducted from my check through the payroll deduction program?
Payroll deductions will start on September 1 and will end on August 31 with twenty four equal deductions of $8.33 per pay for the parking plan year.
6. Will an employee's participation in the pre-tax plan affect social security benefits?
Participation in the Plan will reduce the amount of an employee's taxable compensation. Accordingly, there could be a slight decrease in the employee's future social security benefits which are based on taxable compensation. For most people, the immediate tax savings of the pre tax benefit is likely to be more valuable. If an employee has questions as to the effect of this deduction on their social security benefits, the employee should consult his or her tax advisor.
7. Will an employee's participation in the pre-tax plan affect their retirement or tax deferral plans?
Participation in the Plan will not affect PERS, ORP, or amounts deferred under Internal Revenue Code Sections 403(b) or 457.
8. Is participation in the pre-tax plan optional?
Yes, participation in the plan is optional. If an employee chooses not to participate in the Plan, he or she may pay for the parking permit through payroll deductions on an after-tax basis.
9. Can an employee stop participating in the Plan at any time?
An employee may stop participation in the pre-tax plan only during the two open enrollment periods by giving written notification to the Payroll Department using the Campus Parking Plan Payroll Deduction Enrollment / Waiver & Cancellation Form. The payroll deductions will be revoked starting with the first pay period following receipt of the notification by the Payroll Department. In addition, employees may only change their tax deduction election during the two open enrollment periods. Participation in the Plan will also end upon termination of employment.
10. Where should I send the payroll deduction form?
The Campus Parking Plan Payroll Deduction Enrollment / Waiver & Cancellation Form should be submitted to campus police, who will match up the form with your online enrollment and then pass the form to the payroll department.
11. The Campus Parking Plan Payroll Deduction Enrollment / Waiver & Cancellation Form is available online, but why can't I submit it online?
Because the parking plan reduces an employee's take home pay, it is current practice for the Payroll Department to receive an authorization containing an employee's signature. A signed form authorizing and agreeing to specified terms is required to process any type of payroll deduction. The signed form becomes a part of the employee's file and is utilized if questions arise in the future.