Special-Band3558 t1_j6kpke9 wrote on January 31, 2023 at 12:31 AM

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

SilverSquare OP t1_j6kt705 wrote on January 31, 2023 at 12:58 AM

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.

Brye11626 t1_j6kys4x wrote on January 31, 2023 at 1:39 AM

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.

SilverSquare OP t1_j6ldylm wrote on January 31, 2023 at 3:34 AM

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).

Brye11626 t1_j6lg797 wrote on January 31, 2023 at 3:52 AM

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.

shadow_chance t1_j6lapo4 wrote on January 31, 2023 at 3:09 AM

> 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.

[deleted] t1_j6l978s wrote on January 31, 2023 at 2:57 AM

[deleted]

SilverSquare OP t1_j6ld9ms wrote on January 31, 2023 at 3:29 AM

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.

rcc1201 t1_j6lqj6b wrote on January 31, 2023 at 5:27 AM

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.