IRC 132 New York Question

[TaxLady1975]

On the wages and income section of turbo tax I have entered IRC 132 in the description, however there is no correct category in the category dropdown menu. The closest thing is IRS section 18, but that clearly does not correspond to a transportation benefit. What should New Yorker's select for the category for IRC 132?

[LenaH]

If none of the categories apply when entering your W-2, scroll to the bottom of the list and choose Other (not classified).

The amounts for transportation benefits aren't subject to taxable wages, Social Security, Medicare, state, or city taxes and should have already been deducted in the appropriate boxes on your W-2 form. This entry is for informational purposes only. 

For more information about Box 14, please see What is box 14 on my W-2 for?

[TaxLady1975]

When IRC 132 is entered manually after selecting "other" there is no modification to the refund as if the figure is not being tabulated and it is not included as a pre-tabulation in box 1.

[KeshaH]

Section 132 benefits won't change your New York refund or balance due because this amount is not subject to tax in New York, unlike Section 404(h), for example. 

When you choose the dropdown on the W-2 for Section 414(h), that amount is added back to your NYS tax return because it isn't considered an item that is excluded from income tax in New York. However, the Section 132 benefits aren't taxable in New York, so there is no add back. 

There'd only be a subtraction if the benefits were included in federal taxable income. However, these amounts are generally already excluded from federal gross income, so there's no need to subtract this amount from your New York tax return.

[TaxLady1975]

If the software is intended to make tax calculations more simple, it has failed. There are no popup windows or solid explanations for IRC132. How does the consumer know if it already has been tabulated as s deduction in the W2 in section 1? Is the advice that we should simply assume it is? In my case, it does not appear to be a pre-tabulated figure and there is no guidance to resolve this.

Why would the response indicate that the IRC132 isn't taxable? Of course it's not taxable. It's an out of pocket expense that is intended to reduce federal income tax, it is not income. The response doesn't make sense. The question was not asking if it was taxable, the question is about where the deduction is being tabulated in the correct income sections. 

If you can please advise on how a person can determine if box 1 contains the tabulation OR advise how IRC132 can be implemented to catalyze the federal deduction, that would be great. Thank you.

[KeshaH]

To ensure the Section 132 benefits have already been excluded from boxes 1 and 16 of your W-2, you will need to compare your W-2 with your paystubs or contact your payroll department for guidance. Since these benefits should already be excluded from the W-2, there's no place in TurboTax to make the adjustment to modify state income. If the W-2 incorrectly includes these benefits in your income, you will need to request a corrected W-2 from your employer.

[NMCGEE]

Thank you for pressing for a more detailed and accurate response.

Sadly, EVERY YEAR, I am billed an additional NY State assessment, plus interest, because of this one section. Turbo Tax does NOT calculate this correctly, and this will be the last year I use them.