Qualified Transportation Plans

[Chaz]

Employee's residence is in a big city. Employee travels each Monday to a temporary home near her employer, where she stays for the week. She returns home to the city each Friday.

Can her transit expenses traveling each Monday and Friday be reimbursed under a qualified transportation plan?

[CTipper]

If she was using public transportation, probably.

But, if she's just using her own vehicle, no. She's just commuting. Yes, it's a heck of a long commute, but a commute never the less.

Hope that helps a bit.

Christopher

[Steelerfan]

Employee's residence is in a big city. Employee travels each Monday to a temporary home near her employer, where she stays for the week. She returns home to the city each Friday.

Can her transit expenses traveling each Monday and Friday be reimbursed under a qualified transportation plan?

Just saw this post on a search. Also when the commute requires an overnight stay you are into the travel expense rules, not local transportation; in this scenario it looks like her travel expenses would be non deductible because her employment is not temporary and she chooses to live far away from her principle place of employment.

[leevena]

A qualified transportation plan (Section 132) covers two types of expenses, parking and commuting. The parking can be either costs for parking near the employers place of work, or, parking at a location where you then use a train or bus to get to work. The commuting costs need to be "mass transit", such as a train.

So in your situation, the person cannot claim the commuting costs, but could use the costs of the parking near the employer, if they are incurring this cost.

[Chaz]

This is the scenario (with the names of places changed to protect the innocent). The employee lives in New York and works Monday through Friday in Albany. The employee takes mass transit (Amtrak) every Monday morning to his job in Albany. The employee stays at temporary housing in Albany during the week and commutes back on Amtrak to his permanent house in New York on Friday. Can the employee participate in a qualified transportation plan with respect to the cost of the Amtrak tickets?

I don't see anything in the regs that require the commute to be "local."

[Steelerfan]

I don't see anything in the regs that require the commute to be "local."

I don't either. If there is no requirement that the transportation be local, then I can't see why not.

My comment was kind of looking at the whole picture beyond your Q on the transportation fringe.

When employees have arrangements like this, you have to keep an eye on other tax consequences. If she is not being reimbursed for meals and/or cost of housing for the week, such expenses would not be deductible by the employee (she may or may not be trying to deduct the expenses). If the employer is reimbursing the employee for such (travel-related) expenses, the reimbursements would be income or wages (if the reimbursement is under an accountable plan) because the expenses are not deductible under 162(a). (Her "tax home" is likely where the employer is located and thus she is not traveling away from "home.")

The fact that transit expenses in this scenario could be reimbursed under a qualified transportation plan is a nice way around the harsh travel expense rule, which would otherwise make the travel expenses in your scenario nondeductible and thus not reimburseable as a business expense. Of course the employee would have to give up using their car.

[leevena]

Yes, you are both correct in that "local" is not required. The key wording is "mass transit" types of transportation costs. Since your original question did not indicate the use of a train to get to Albany, I assumed the person was driving their personal car. I would suggest that the Amtrak costs would be eligible.