Posted on January 18, 2013

The American Taxpayer Relief Act (ATRA) retroactively increased the monthly tax-free transportation benefit for participating employees from $125 to $240 for the period of January 1, 2012 to December 31, 2012. The IRS has released guidance for employers on how to file Form 941 for the fourth quarter of 2012 and Form W-2s.

How to File Form 941

There is no need to re-file your Form 941s for the first three quarters of 2012. If you haven’t filed Form 941 for the fourth quarter of 2012 yet, you can reduce wages, tips, and compensation by the full-year accumulated amount of transportation benefits. But first, you will need to repay employee Social Security and Medicare taxes that were withheld for transportation benefit amounts.

If you have already filed Form 941 for the fourth quarter, you will need to file Form 941-X to adjust the taxable wages for this retroactive benefit increase. Be aware that the IRS does not intend to extend filing deadlines at this time.

How to File Form W-2s

If you have not submitted Form W-2s, you can apply the increased tax-free amounts toward totals on those forms. If you have already submitted the forms, use Form W-2c to correct for the increased benefit.

Paycor clients who are affected should have received communication about this change.

Want to learn more about Paycor’s tax filing services? Contact us today.