Buried in this NY Times piece by Ron Lieber about the TransitChek program to provide federal pretax commuter benefits is more bad news for freelancers: others, with officially sanctioned employers, have access to these commuter tax benefits, and we don't.
Your employer, if it offers this option at all, will let you take money out of your paycheck, before it takes out money for income and other taxes, to pay for your commute. You can generally spend that money on mass transit, to park your car at or near where you work (or at the train or bus station), or for your share in a van pool.
The haggling over the years has been around just how much you can set aside. This year, it was $230 a month for both mass transit and parking.
But, unless you work for an employer who is set up to deduct the commuting money from your paycheck, pre-tax, you get bupkis.
Unsurprisingly, a lot of small businesses don't want to take on the headaches and accounting work of offering this to their employees, and strangely, many employees who have the opportunity to take this benefit, don't. Idiots.
A single New York City resident with $75,000 in taxable income who buys a $104 all-you-can-ride MetroCard each month saves $533 in taxes each year by setting aside money on a pretax basis. That pays, in effect, for five months of commuting.
More affluent couples can save even more. Take a New York State-dwelling, New York City-working duo with $250,000 in taxable income. Now assume they both put aside $240 each month, and one of them also socks away $30 to pay for parking at the suburban train station.
Under those assumptions, the couple achieves a whopping $2,515 in tax savings. If they can put aside only $125 each month in the transit account, however, the household savings fall to $1,381.
That $1,134 difference is what is at stake in Washington this month, since the current $230 cap for both parking and transit will become a $240 cap for parking and a $125 one for transit on Jan. 1 without any Congressional action.
Executives at TransitCenter are, quite cleverly, calling this a tax increase for mass transit riders. Meanwhile, plenty of elected representatives in rural states or districts probably find the idea of any subsidy to be absurd.
This benefit may not persist because the US congress may not continue it. It's really geared toward urbanites, and our 'leaders' in Wyoming and Montana could give a shit.
The thing that pisses me off is that I can't get this tax shelter becuase I have no employer. It's amazingly unfair.
I am going to ping the Freelancers Union, and see if Sara Horowitz can dream up some way that the laws can be amended. After all, I am withholding my own taxes and paying on a quarterly basis, and paying both halves of my social security: shouldn't I get the pretax write off for commuting that every wage slave does?
