What You Need to Know: Financial Incentives

As with retention payments, use is concentrated in certain agencies and occupations. By agency, the most enthusiastic payers are the Justice, Defense and State departments, the Securities and Exchange Commission and the Government Accountability Office. By occupation, your best chances are if you're a criminal investigator, attorney or intelligence employee. But that doesn't mean the payments are restricted to those agencies and jobs; again, it never hurts to ask.

Another subsidy helps reimburse employees for their commuting costs if they use public transit or van pools. Most federal employees in the immediate Washington, D.C. area are eligible to receive up to $120 a month, in 2009, in the form of passes or vouchers such as Metrochek. Many employees outside the capital region may pay for their transit or van pool expenses from pre-tax money, up to the same limit.

That's just one way the government sweetens its compensation package through tax breaks. Employees can set up one or both of two kinds of flexible spending accounts, with an annual amount of up to $5,000 going into each pre-tax. Health care accounts can be used to pay expenses not covered by health insurance, while dependent care accounts can be used for day care and after school care for children as well as for adult day care for dependent parents.

Also, investments in the Thrift Savings Plan, the government's 401(k)-style retirement program, are tax-free. The investment limit, set by the IRS, is $15,500 in 2008 and $16,500 in 2009. Employees age 50 and older can put in an additional $5,000 and $5,500, respectively. The tax break effectively lowers the cost of investing.

Further, most employees pay their health insurance and vision and dental insurance premiums with pre-tax money-what the government calls "premium conversion." Depending on which types of coverage employees have, this can be a tax saving of $1,000 a year or more.

The government also has authority to pay employees for expenses such as:

. Obtaining professional credentials such as accreditation, licenses and certifications.

. Paying professional liability insurance to protect against being held personally liable for job-related decisions.

. Getting an academic degree, so long as that degree meets an agency training need.

. Some child care costs, for lower-income employees.

Another goodie is that the government allows employees to keep the frequent traveler credits they earn while on official travel. This isn't a direct payment, but it does have value in the form of free trips and upgrades.