- General Rules and Qualifications
- Employer Provided Reimbursement - Transportation Fringe Benefits:
- Nonresidents and Part-year Residents
- Where to Report on Original Tax Return, What to Enclose
- Documentation to Submit with Abatement/Amended Return
- Massachusetts and Federal References
- Prior Law, History of Deduction
- Commuter Deduction - E-Learning course
- tolls paid through the Massachusetts E-ZPass account; or
- the cost of weekly or monthly transit commuter passes for Massachusetts Bay Transit Authority transit, bus, commuter rail or commuter boat.
- single, married filing separate or head of household filers - the deduction applies only to the portion of commuter costs that exceeds $150;
- married couples filing joint - the deduction applies only to the portion of commuter costs of each individual that exceeds $150. One spouse cannot transfer his or her excess deduction to the other spouse.
The total amount deducted may not exceed $750 for each individual.
Employer Provided Reimbursement - Transportation Fringe Benefits:
Amounts paid must be reduced by any amounts reimbursed or otherwise deductible. The commuter deduction is allowable only if the amount is not otherwise deducted. Where transportation costs are deductible both under G.L. c. 62, s. 3(B)(a)(15) and any other provision of law, the same expenses cannot be deducted twice.
Also see Transportation Fringe Benefits
Based on IRS's Revenue Procedure/inflation adjustment formula, the Massachusetts exclusion amount for tax years 2014 and 2015 is $250 per month for employer-provided parking and $130 per month for combined transit pass and commuter highway vehicle transportation benefits, that are a reduction in salary.
If an employer pays for an employee's MBTA pass, the amount by which the value of the pass exceeds $130 a month is included in the employee's income and reported as wages on the employee's W-2. To calculate the commuter deduction in these circumstances, the employee first deducts the $130 a month ($1,560 a year) from the cost of the pass; the remainder is the amount qualifying for the commuter deduction. The amount of the commuter deduction is the portion of the qualifying expenses that exceeds $150, and the total amount deducted cannot exceed $750.
Employee Payment by Payroll Reduction:
Where an employee pays for an MBTA pass through payroll reduction, the total cost of the pass is eligible for the Massachusetts deduction, assuming all other requirements are met
MBTA Passes Eligible For The Deduction :
- Any MBTA commuter pass or Charlie Ticket that is designated to be a monthly or weekly pass;
- The MBTA commuter rail "Twelve-Ride" pass;
- The MBTA express bus or commuter boat "Ten-Ride" pass.
Tolls and passes that are not covered:
- PVTA; etc.;
- "Stored-Value" Charlie Ticket - these tickets are sold by the MBTA to replace payment by tokens or cash. A stored-value Charlie Ticket will have the fare deducted from it each time a patron rides the subway or bus.
- for residents, the Schedule Y Worksheet - Commuter Deduction;
- for part-year residents, the Schedule Y Worksheet - Commuter Deduction. To determine amount allowable, they must multiply the amount of this deduction by the ratio in Massachusetts Form 1-NR/PY, Line 2, Total Days as Massachusetts Resident, since this deduction must be prorated based upon the number of days a taxpayer is a Massachusetts resident;
- for nonresidents, the Schedule Y Worksheet - Commuter Deduction. To determine amount allowable, they must multiply the amount of this deduction by Massachusetts Form 1-NR/PY, Line 14g, Nonresident Deduction and Exemption Ratio, since this deduction must be prorated based upon the amount of taxpayer's Massachusetts source income to his/her total income.
Dependents Claimed on Taxpayers' Income Tax Returns:
The deduction is allowed where an individual purchases an MBTA pass for a dependent who is claimed on that individual's tax return, provided the dependent does not also claim the deduction. However, the total amount deducted cannot exceed $750 for each individual taxpayer who is filing a return. In the case of married taxpayers filing a joint return, the total amount deducted cannot exceed $750 per taxpayer; thus, the maximum deduction for a joint return is $1,500.
Example: Husband and wife filing jointly - husband pays for both his and dependent's MBTA passes totaling $1,200; wife pays for her passes totaling $550. Amount of deduction allowed would be $1,150 ($750 for husband and $400 for wife)
|for Himself and Dependent||for Herself|
|Deduction Amount Before Limitation:||$1,050||$400|
|Deduction Amount With Limitation:||Husband||Wife|
Monthly passes, FastLane reports, credit card statements, bank statements, pay stubs, and similar records will serve to substantiate allowable-commuting costs.
- Residents must complete the Schedule Y, Line 15 Worksheet - Commuter Deduction, 2014 Form 1 instructions, Page 19 . If qualified, enter the amount from Line 6 of the worksheet on Form 1, Schedule Y, Line 15.
- Part-year residents must complete the Schedule Y, Line 15 Worksheet - Commuter Deduction, 2014 Form 1-NR/PY Instructions, Page 24 . To determine the amount allowable, multiply the amount reported in Line 6 of the worksheet by Form 1-NR/PY, Line 2, Total days as Massachusetts resident, since this deduction must be prorated based upon the number of days a taxpayer is a Massachusetts resident. If qualified, enter the amount from Line 7 of the worksheet on Form 1-NR/PY, Schedule Y, Line 15 .
- Nonresidents must complete the Schedule Y, Line 15 Worksheet - Commuter Deduction, 2014 Form 1-NR/PY Instructions, Page 24 . To determine the amount allowable, they must multiply the amount of the deduction computed on the worksheet by Massachusetts Form 1-NR/PY, Line 14g, Nonresident Deduction and Exemption Ratio, since this deduction must be prorated based upon the amount of the taxpayer's Massachusetts gross income (derived from sources within Massachusetts) to Massachusetts gross income derived from all sources, as if the taxpayer were a full year Massachusetts resident. If qualified, enter the amount from Line 7 of the worksheet on Form 1-NRPY, Schedule Y, Line 15.
- Copy of Form 1040 - U.S. Individual Income Tax Return (Page 1), or Form 1040X - Amended U.S. Individual Income Tax Return.
- M.G.L. Chapter 62, Section 3(B)(a)(15) as added by St. 2006, c. 139, ss. 42 and 131; St. 2004, c. 352, s. 165
- TIR 06-14:Personal Income Tax Commuter Deduction Income Tax
- TIR 04-25: Effect of Recent Legislation on the Personal Income Tax, Withholding of Tax, and the Declaration of Estimated Tax by Individuals
- TIR 04-11: Massachusetts Exclusion Amounts for Qualified Transportation Fringe Benefits (This TIR updates TIR 03-6 by providing the Massachusetts exclusion amounts for tax year 2004)
Federal References :
- I.R.C. §§ 132(f); 164(f)