NathanL104

Hello,

Not to start a heated tax discussion, but I wanted to bring up the fact that you can use pre-tax transit cards for buying Amtrak tickets for non-commute related travel (At least with my program). I use my whole amount for a monthly transpass to work, but I know you can do this on the Amtrak website (even cancel the ticket for an evoucher).

I looked up the original IRS code for this fringe benefit and found this (Excerpt):

(f) Qualified transportation fringe
(1) In general
For purposes of this section, the term “qualified transportation fringe” means any of the following provided by an employer to an employee:
(A)Transportation in a commuter highway vehicle if such transportation is in connection with travel between the employee’s residence and place of employment.
(B)Any transit pass.
(C)Qualified parking.
(D)Any qualified bicycle commuting reimbursement.

For purposes of this subsection—
(A) Transit pass
The term “transit pass” means any pass, token, farecard, voucher, or similar item entitling a person to transportation (or transportation at a reduced price) if such transportation is—
(i)on mass transit facilities (whether or not publicly owned), or
(ii)provided by any person in the business of transporting persons for compensation or hire if such transportation is provided in a vehicle meeting the requirements of subparagraph (B)(i).

It seems the commuter vehicle in (A)(i) HAS to be to and from work but I don't see anything here saying the transit pass (including farecards, which I assume could be a one-time Amtrak ticket) by law has to include travel to/from work.

So I know using 1,300 tax free dollars/year for Acela travel seems suspect, but it appears legal. Taking a cab to work, however, not legal.

fairviewroad

I have no problem if someone uses a tax benefit to get a monthly transit pass that entitles them to unlimited rides, and in addition to using that pass for daily commuting, also uses it for "leisure travel" if the latter does not increase the cost of the pass.

Using a tax benefit for one-time tickets that are not for commuting purposes is obviously unethical. I can't comment on the legality, but have fun explaining your theory to an IRS auditor.

amamba

My husband buys his monthly amtrak pass through use of an FSA transit card.

Now of course, he sometimes takes leisure trips on the monthly pass. But I would consider anyone who just buys leisure tickets with this benefit to be doing something that is definitely not the intended use of the benefit, and just jeopardizes the deduction/benefit for the rest of us.

Right now let's focus on getting the transit benefit to match the parking benefit again. Those were fixed temporarily (so that the benefits were the same amount) for a few years but the fix expired for 2014. So now folks who pay for parking get $250 tax free/month to pay for parking fees but those using public transit only get $130/month tax free.

That is seriously messed up and amounts to an additional $1,440 of income that I will need to pay taxes on for 2014.

Often1

There is no ethics issue at all. The expenditure and use is either authorized or not. If so, it's a valid use and a non-issue. If not, it is a tax violation and can lead to civil and/or criminal penalties. Not much more to it.

ne52

To try and avoid the tax discussion as much as possible, you're getting into a 'letter and spirit' differentiation which unfortunately doesn't hold up well in audit. You're not just bound to follow only what's written in that specific section.

It's a tax benefit and not a subsidy. Ignoring the parking benefits, the point of the underlying legislation is to encourage more people to take mass transit/vanpooling for regular commuting. Local agencies that are used more for commuting than Amtrak often have an FAQ explaining that it's to be used for commuting purposes only.

Could you do it and might never have an issue?
Yes.
Is it ethical?
If you have to ask, then usually the answer's no.

If you were to be audited, the deduction probably would not stand. That affects your reported adjusted gross income for the year which brings a penalty fee... plus interest on the difference. The transit benefit is also so low now the potential 'payoff' just doesn't seem worth the risk.

To me, it's ethically the same as maxing out a Healthcare Savings Account, spending it all on Nicorrete at CVS, then selling it on ebay at a discount.

calwatch

Of course, note that with most transit benefit cards, you lose the funds 90 days after your last day, whereas for parking, you lose those funds immediately.