Are commuter benefits worth it despite working remotely? I still take public transportation.

Submitted by SilverSquare t3_10pidvn in personalfinance

Wondering if I'm just thinking about this too much since it feels obvious or if it's better I don't use it and spend my money usually. I wanted to double-check with y'all.

I am working remotely. We don't have an office anymore, but we have the option to use co-working spaces. I don't use that. I have a license, but currently, no car to use. I use public transportation and rideshare a lot.

I don't think they care if I'm using the transit benefits for my own use. Either way, I have the option to put some money pre-taxed towards a commuter card or a transit pass each month.

Considering I currently use public transport a lot for non-work purposes, is this worth taking a portion off my paycheck to put onto a pre-taxed commuter card/transit pass? How much would I be saving by doing this?

7

Comments

You must log in or register to comment.

Special-Band3558 t1_j6kpke9 wrote

What you are describing is technically tax evasion if you are in the US.

7

SilverSquare OP t1_j6kt705 wrote

How is it tax evasion?

Not being defensive, but genuinely curious. If I am using my commuter benefits to purchase transit currency for use of traveling, is that really evading taxes?

Despite my vague and confusing post, I was looking more into if this is beneficial to save money for something I am already spending money on.

1

Brye11626 t1_j6kys4x wrote

Throughout the Fringe Benefit section of the IRS (Pub 15-B) there are multiple notices that commuter benefits must be used only between your place of residence and your place of work. This is explicitly stated for highway share and parking. Using it for other reasons would be considered a fraudulent use of the card for evading taxes.

In the public transit subsection, it's left ambiguous. Likely because the IRS doesn't want you to use it for personal travel, but also is aware that proving you didn't use your transit card to go to work may provide difficult. Especially with things like weekly or monthly passes.It's a legal gray zone for sure, but unlikely to ever see enforcement.

Many providers of transit cards discourage use of transit benefits for non-work related expenses, likely because they don't want to be complicit if you in fact get audited.

7

SilverSquare OP t1_j6ldylm wrote

I replied in a different response, but in the event I do this and I do this the correct way (using it only for work-related travel), would I have to log my travels in case I ever get audited? The way that they would provide this benefit to me is I would make a declaration of how much I’d want to take out of my paycheck, it would be added to either a commuter card debit card (or straight into a transit pass if I wanted to), and afterwards I’d use that card to buy/load my transit pass.

What are the odds of being audited for something like this? I’ll definitely bring this up and ask my benefits team since they distinguish between commuting and parking, with only work specific language on the parking portion where it states that this can be used to pay for parking near your workplace. versus the commuting is just a catch-all “use it to pay for commuting expenses (bus/train/carpool), but nothing else (rideshare like Uber/Lyft not included).

1

Brye11626 t1_j6lg797 wrote

I'm not sure anyone knows, and I've never known someone to get audited for intracity public transport. It may exist, but I've never heard of it. The fact that most card providers tell you not to do it at least raises some concern they could cancel your account for incorrect usage (violating terms of service does not require a law to be broken).

Your benefits team will likely provide little or no help (just like your card supplier) since the law is ambiguous. They will repeat the same language the IRS has stated ("parking near your workplace" and "transit expenses").

The problem is exactly what you stated. Back to the original subcategory we are talking about. Commuter expenses. “Use it to pay for commuting expenses (bus/train/carpool)".

Would you consider a trip to the grocery store a "commuting expense"? I certainly wouldn't. Will anyone care? I certainly doubt it.

3

shadow_chance t1_j6lapo4 wrote

> I don't think they care if I'm using the transit benefits for my own use.

The IRS does. The benefit is specifically for commuting, not personal use.

6

[deleted] t1_j6l978s wrote

[deleted]

0

SilverSquare OP t1_j6ld9ms wrote

Appreciate the answers, y’all. I’m definitely learning a lot. How would this be something interpreted as a remote worker? Would a bus ride to a local coffee shop to work be fine? Would getting things like office supplies/coffee to make my “work environment” better be fine? Would I have to keep a log of my travels? I’m not hiding the fact that I am remote as I transitioned from working in office, representing a specific location to now declaring being a full on remote worker.

Asking because I was wondering if you have clarification on what would be determined legal for remote workers? Also legit asking for context as I’m just learning about this and not at all to circumvent or loophole this. It seems like a gray area, but also uncertain since remote work existed before the pandemic.

If I went through this process, I’d get a physical card sent to me and the purchase would be for a physical transit pass that would be periodically loaded as needed, so the only charge would be on that commuter card while my transit pass is the one getting used for commuting.

It seems like it’s one of those things that I shouldn’t be too concerned about in terms of enforcement, but also I feel like I’ll play it safe. Either way, I can still load a minuscule amount for the few times I do meet up for work at a co-working space and $5-$10/month would help cover those rare trips while saving some money on tax.

2

rcc1201 t1_j6lqj6b wrote

A commute is, by definition, travel between one's home and workplace. Your home and workplace are the same, so I doubt you incur any public transit expenses worthy of commuter benefits. A commute does not include workplace errands or travel to locations you'd prefer to work from (if anything, your employer might reimburse you for work-related travel expenses). You could probably make a case for using it to travel to co-working spaces provided by your employer.

But as many people have pointed out, enforcement is an extremely unlikely possibility. And worst case, they're just going to ask you to pay taxes on the benefit. So if you are willing to take that risk, just sign up for/use the benefit.

1

rnnikki81 t1_j6kov56 wrote

Double check your policies. I get a (highly subsidized) buss pass, but I'm only supposed to use it for travel to and from work.

It's $15/month, and I do work remote primarily. But if I bus in to the office twice, it has paid for itself (more so if I factor in parking and toll bridges!)

3

SilverSquare OP t1_j6kszkx wrote

thanks! so far I looked at the policies and there's no specific wording on it had to be work-related travel. as long as it's used towards transit like busses/trains, it's allowed. I'm interpreting this as "hey remote workers, you technically can work from anywhere so we're not going to be on your ass about where you're using your transit pass as long as you're using the benefits to purchase transit passes, then you're good."

the only work-specific wording i see is parking, which is a separate commuter benefit where the parking has to be near a workplace, which I'm interpreting as near any coworking spots as we don't have an office anymore.

2

responsible_fruit1 t1_j6knijx wrote

this is a confusing question but if you're planning on spending the money anyway, you're always going to save money pre-tax vs. post-tax.

for example: if your pre-tax income is $1000 and you spend $100 per month on public transportation for whatever reason (and assuming 20% taxes):

  • using the commuter benefits pre-tax
    you'd be paying 20% on your income minus $ you save for commuter benefits
    $1000 - $100 = $900
    paying total of $900 * 20% = $180 in taxes
  • if you forgo the commuter benefits and just pay out of pocket
    you'd pay 20% tax on your income of $1000
    paying total of $1000 * 20% = $200 in taxes

it'll always be in your best interest to decrease your overall taxable income to save money in the long run.

1

SilverSquare OP t1_j6ks3jj wrote

thanks! sorry if it wasn't clear. i think being in my head about it too much is just making it more complicated than it needs to be.

but you answered it perfectly with a good example even though i didn't provide any data (that's on me). your explanation really makes it clear.

1

greyAbbot t1_j6knnhb wrote

I don't know if I'm misunderstanding your question, but I can't possibly see how anyone except you would be in a position to answer this, especially since you've given us zero data on which to even do some math on your behalf.

Isn't it as simple as which is the cheaper of the two ways to pay for public transportation? Can you estimate how much "using public transportation a lot" translates to in dollars of tickets? And how does that compare to what it costs to buy the transit pass pre-tax? The only tricky thing is that since paying full-fare is with post-tax dollars, you'd have to figure out your overall tax rate to know what that would be in pre-tax dollars.

1

SilverSquare OP t1_j6ktjdb wrote

Thanks for your help. Sorry that I didn't have the numbers, but someone did use an example with arbitrary numbers that helped display the point.

I think in the end I realized I was wondering how much would be the difference between me utilizing my commuter benefits for a transit pass versus straight up spending my own cash on it.

1

TacticalLeemur t1_j6ljudh wrote

I put $300 on a transit card two years ago from a commuter account. I use the train all the time and I still have $100 left on the card. I figure anything you would use anyway, you might as well do tax free if possible. That last $90-ish in train rides is essentially free.

1

SilverSquare OP t1_j6m5rqd wrote

Do you use it for work? I know the general consensus here is that it's supposed to be for work otherwise you get into some gray area of legal issues.

1

TacticalLeemur t1_j6my6z9 wrote

I do use it for work, but I prefer to ride my bicycle when the weather is nice--so it has lasted me a very long time. That said, the stipulations listed around our commuter plan have only stated the types of services it can be spent on, and not when they can be used.

1

PM_Georgia_Okeefe t1_j6kzceb wrote

If you're using a service that can be paid for with pre-tax dollars, why not use it?

0

CQME t1_j6kptxi wrote

>Considering I currently use public transport a lot for non-work purposes, is this worth taking a portion off my paycheck to put onto a pre-taxed commuter card/transit pass? How much would I be saving by doing this?

You add a lot of irrelevant detail to a very simple question.

You don't have a commute because you work remotely and don't report to an office.

You use public transportation whenever you need transportation.

You seem to believe that because you don't have a commute, you don't qualify for a "commuter card". This is false. You can use public transportation for whatever transportation needs you have and public transport can fulfill. All a "commuter card" is is a discount card for frequent users, many of whom have a commute.

−1

rcc1201 t1_j6lqwfo wrote

That's not true. The IRS specifies in the Fringe Benefit section (Pub 15-B) in multiple places that commuter benefits must be used only between your place of residence and your place of work. Use for non-commute purposes is not eligible for pre-tax treatment.

Highly unlikely the IRS will ever investigate an individual for the minimal difference it might make though.

2

SilverSquare OP t1_j6ktc01 wrote

You're absolutely right. I was super into my own head and made this even more complicated. I think I just wanted to make sure that it was indeed as straightforward as it sounds, so thanks for that.

0