It is not deductible on the tax return. It is, rather a fringe benefit that the IRS allows you to take that has already been deducted from your taxable income reported to the IRS and NY. This website link provides more information: commuter-benefits-FAQs - NYC.gov.
NJ is another story. Not only is the amount not deductible, it must be added back into income for the purpose of determining NJ tax. Please notice the following link for Technical Bulletin TB-24R (click on link for pdf document). On that document comes this excerpt:
The New Jersey exclusion differs from the federal exclusion primarily in one way. For the New Jersey tax exclusion, the benefit must be provided in addition to regular compensation and not as part of a compensation reduction plan or agreement. See N.J.S.A. 54A:6-23.c. (Italics added)
In other words, for NJ, if you made pre-tax contributions to the plan for Federal and NY tax purposes, NJ does not allow the deduction. Thus, if you see the amount of your NJ state wages line (box 16) as being more than the NY box 16 or box 1 (Federal wages) on the w-2, this is one of the reasons why.
Which means, in a nutshell, that you probably have nothing additional to do in TurboTax. The amount has already been deducted for Federal and NY wages, but has been included for NJ wages. If this is the case, you need not enter anything additional.
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