Saturday, December 18, 2010
Who gets paid to drive to work?
State legislators: I do! I do!
Let me give you a CPA’s perspective on the periodic controversy of travel payments received by state legislators for driving to the State
Most taxpayers are aware that commuting expenses are not deductible on their federal income tax returns. In
Massachusetts, on a side note, there is a small deduction available for people who ride the “T” or buy an “ ,” but this pales in comparison to the benefit enjoyed by state legislators. E-Z Pass
The definition of “commuting” comes from the Internal Revenue Code (IRC) concept of “tax home.” Simply put, traveling to your tax home is called commuting and is not deductible. For most of us, our tax home is where we work and earn our pay; not where we live. If you live in
Barnstable and work in Boston, you are traveling to your tax home ( ). No deduction is allowed for that travel. Boston
State legislators (in all states, by the way, not just in Massachusetts) are subject to IRC Section 162(h), which allows state legislators who live more than 50 miles from the capitol to declare their residence in the legislative district to be their tax home.
This flips the situation from “commuting to work” to “traveling away from home.” Travel away from home is tax deductible and essentially eliminates federal income tax on the per diem travel payments received by legislators.
At least one newly elected state representative announced that he will not take the travel stipend. That is an option, but there’s a better one.
During a debate that was videotaped by
, Matt Pitta, WXTK news director, asked Lance Lambros and me if we would be willing to donate the travel stipend to charity. We both agreed. Cape Cod Community Media Center
The idea of refusing the travel payments, thereby leaving that money in the coffers of the state under the spending direction of the state legislature and administration, leaves me a bit cold. My confidence that this money will be wisely spent is low.
Matt’s idea of donating the money to charities of our choice is a terrific alternative. I will meet with Matt over the next couple of weeks and choose one charity for each month. My only stipulation will be that the organization either reside in the 5th Barnstable District or serve people in the district.
If all of our
Cape Cod legislators joined in this effort, the combined contributions to our charitable organizations would amount to about $60,000 to $75,000 over the coming year.
What do you say, Cape Cod legislators?