How can I deduct pretax transit pass allowed by the IRS?

Thanks for reaching out to the Community forum, @kirk959.

Setting up a deduction for pretax transit pass allowed by IRS requires guidance by a Tax Professional to ensure accounts are properly tracked. There are supported pay types and deductions in QuickBooks Online (QBO). To know more about this, check below articles:

• Supported pay types and deductions explained
• Set up voluntary deductions in Online Payroll

If there's anything else I can help you with in managing your QuickBooks Online account, please let me know by commenting below. I'm more than happy to further assist you.

I have the same question for QB Desktop. I have not found an option that allows me to select the appropriate exclusions based on IRS and Accountant guidance. It would appear so far that QB does not support it.

It's a delight to assist you today, @pjvet.

QuickBooks Desktop allows you to easily manage your payroll items. Thus, you can make use of the Edit Payroll Item option which can be found in your Payroll Item List.

You'll want to use the net pay option on your payroll item for the deductions to calculate pretax. I'll walk you through the steps on how to do it:

1. Go to the List menu and select Payroll Item List.
2. Right-click on the payroll item and select Edit Payroll Item.
3. Click Next until you reach the Tax tracking type window.
4. Select the correct tax tracking type.
5. Click Next until Finish.

I'll leave you with this article on editing payroll items for your reference.

You can always visit us in the Community again if you have other concerns about setting up payroll taxes. Just leave me a reply below and I'll get back to you. Have a great day ahead!

The instructions would work if an appropriate tax tracking type was available. I could do an "other", but I am an assisted payroll customer which locks me out from creating a custom pre-tax item with the appropriate exemptions:(. I've done some searching in various QB help locations, talked to assisted payroll and confirmed it is gap in the product. I have submitted a suggestion. I hope a work around is created ASAP.

You have to use one of the tracking types provided by QBD then deselect and/or select items the pre-tax deduction should impact. It would be whole easier to just say we don't have a preconfigured tracking type for pre-tax commuter deductions so you need to select the closest tracking type and modify as needed per your tax professional.

I did not think I would be able to do it as I was not allowed to use "other" and select the items I wanted to be reduced. I think not being able to use "other" is an artifact of being an Assisted payroll customer. They lock out the ability to change a lot of items in payroll to protect end users from changing Intuit's defaults. Curiously I was able to take an another tax tracking type and deselect items it should not reduce to get to what I wanted which sort of contradicts why I was not able to modify the "other" option. I will say it did ask me to confirm that I wanted to override the defaults I deselected. I hope this helps others.