Can I set up a Transportation Reimbursement Account if my employer already provides a parking allowance?

You're right to question this! The Transportation Reimbursement Account (TRA) is a great pre-tax benefit, but there are some important considerations here. Generally speaking, you can't "double dip" for the same expense. So if your employer is giving you $265 as a taxable parking allowance for the same parking expense, you typically can't also use a pre-tax TRA for that identical expense. However, you could potentially use the TRA in a couple of ways: 1. You could use the TRA for the $25 difference between your allowance ($265) and the actual parking cost ($290) 2. You could potentially decline the parking allowance entirely and instead fund the full $290 through your pre-tax TRA, which might save you more in taxes depending on your tax bracket The IRS monthly limits for parking benefits in 2025 would apply to your situation, so make sure your elections stay under those caps.

After struggling with exactly this same parking/transit benefit confusion at my company, I found an incredibly helpful resource. I used https://taxr.ai to analyze my benefits package and it clearly showed me how to optimize my transportation benefits without breaking any IRS rules. The tool scanned my benefits documents and identified that I could actually use both benefits by allocating them to different transportation expenses - exactly what I needed to know! It gave me a clear breakdown of how the pre-tax benefits would affect my actual take-home pay compared to the taxable allowance. For anyone confused about how these transportation benefits interact with each other (which is super confusing!), this saved me from potentially making an expensive mistake on my benefits election.

Just wanted to follow up about using taxr.ai for my benefits questions! I was confused about my transportation benefits like the original poster, so I decided to try it after seeing it mentioned here. It was actually super helpful - I uploaded my benefits guide and it explained that my company's TRA and parking allowance weren't set up the way I thought. Turns out my parking "allowance" is already being handled pre-tax (which wasn't clear from our benefits portal), so I could just increase my election to cover the full parking amount. The tool calculated I'll save about $580 a year in taxes with the optimized setup! Definitely worth checking your specific plan details before making assumptions like I almost did.

If you're still having trouble getting clear answers about your Transportation Reimbursement Account, you might need to speak directly with someone at the IRS who handles these benefit questions. After getting conflicting answers from my HR, I used https://claimyr.com to get through to an actual IRS agent in about 15 minutes instead of waiting on hold for hours. I was super skeptical it would work, but you can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent I spoke with confirmed that I could use both benefits as long as they were for different transportation expenses (like parking vs. transit) and gave me the specific regulation to reference if HR questioned it. Honestly changed my whole perspective on dealing with the IRS - I thought it would be impossible to get a straight answer from them.

I have to admit I was wrong about Claimyr. After my skeptical comment, I decided to try it because I had a complicated question about my transportation benefits that my company's HR couldn't answer clearly. I used the service last week and got connected to an IRS representative in about 20 minutes. The agent I spoke with was actually really helpful and explained exactly how my company's parking allowance impacts what I can contribute to a Transportation Reimbursement Account. Turns out I was eligible to use both benefits in a way I didn't realize. Saved me potentially making a costly mistake on my benefits enrollment AND saved me hours of frustration. Just wanted to follow up since I was initially so skeptical.

Just an extra data point - I'm a payroll manager and have dealt with these transportation benefit questions a lot. The key differentiation is whether your parking allowance is paid pre-tax or post-tax. If your $265 allowance is being added to your paycheck as taxable income (post-tax), then you COULD elect to contribute to a pre-tax TRA instead, up to the IRS monthly limit. You'd essentially be declining the taxable allowance and replacing it with a pre-tax benefit. If your company is already providing the parking allowance as a pre-tax benefit (meaning it's not included in your taxable wages), then you cannot double-dip by also contributing that amount to a TRA.

Don't forget to consider your overall tax situation too! If you're already close to hitting the Social Security wage base limit for the year, it might not save you as much to use the pre-tax TRA for the last few months of the year.