Can someone help me figure out what a qualified transportation expense is. Will be commuting from Jersey to my job in the city and my company said this plan would allow me to set aside pretax & after tax funds from paycheck to pay for qualified commuter expenses. Is this a good deal ? Am I basically paying for it and then getting reimbursed ?

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Pre tax dollars get taken out of your paycheck for a commuter benefit (usually train or bus tickets). Many people do this.

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This is the best option. You technically pay it, but it reduces your taxable income before you even get the amount. Say your paycheck is 1k, whoever cuts the paychecks will reduce your take home by the amount (say $100). The $100 will go direct to Transit tickets, but you will be only be taxed on the$900

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Sounds like a commuter benefits card that you can use to pay for public transportation like the PATH.

HR should be the one explaining their program.

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You’re paying for it but the benefit is you’re not paying taxes on the amount deducted let’s say you set it to deduct $200 a month and you’re federal tax bracket is 28%, you’ve just saved almost $700 a year by using the benefit (200*.28 * 12)

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It just means you can deduct commuter expenses from your taxes through your jobs program (train, bus, etc).

Lol no worries, it’s your money that’s being taken out and added to a commuter benefits card you can use to purchase your train or bus tickets. Since it’s an employer program deduction, you won’t get taxed on that portion by the government against your salary. For example, you make 50K a year, commuter benefit cost is 5K, you’ll only get taxed on 45K by the fed.

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Basically, let's say your salary is 60k and your monthly commuting expense is $200, then if you opt for commuter benefits 200x12=2400 is deducted from your 60k to go to a commuter plan, and you will be taxed on $57,600 a year (so a tad less taxes to pay). Otherwise you'd still pay 2400 a year, but tax at 60k. You save taxes on that 2400 basically

No, not reimbursed. Usually they have it set up so whatever amount you elect pre-tax (up to a max amount per month, I think it’s 270 this year) goes into a debit card instead of your paycheck. Then you use that debit card to pay for parking, ferry, metro card, metro north / NJR tickets etc.

The benefit of the “pre-tax” portion is that when they add up all your paychecks at the end of the year for your W-2 for your tax returns, they don’t include that amount in your total wages. Thus, you owe a little less in taxes.

The debit card provider that your company uses for this will have information on what “counts” or not. Usually if you try to swipe your card on something questionable, it either gets declined, or it works but you get an email saying they need a receipt to verify or else you have to pay it back (or else they close your account I guess). Of course, once you buy a metro card, it’s not like they have any way to confirm you’re only using it to go to work and then back home… just saying. lol

Not sure what the point of the after-tax portion is. Maybe just convenience, like if you pay exactly $300 for a monthly commuter pass, then you could do $270 pre-tax and also $30 after-tax so you don’t have to use multiple accounts to pay it each month.

It’ll be similar to HSA/FSA account where you elect how much you want to contribute each month and they’ll deduct that pre tax amount from each of your paychecks to transportation expense account and you’ll get a debit card to use it when you need. If your company is using wagework to handle this you can also elect to sign up for a monthly unlimited MTA card and they’ll just deduct that amount from your paycheck and pay MTA directly. I assume they probably have a similar setup for the PATH and NJT. That’s probably the best route to take since you can use those unlimited train cards for personal use as well. Also you don’t have to worry about losing them since you can just call in and get a replacement.

OP, you don’t have to claim anything when you file your taxes. You’re just getting taxed on less income when you participate in the program. The after-tax part is just for convenience if your commuting expense is higher than the amount the law allows you to exclude from your taxes. NYC has a full explanation of every form of transportation that’s covered here - scroll past all the legalese to find it:

https://www1.nyc.gov/site/dca/about/commuter-benefits-FAQs.page

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