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I paid for a few months of a commuter benefit I never used, then left that employer. According to §1.132–9 in the CFR, these funds can't be returned by employers (see Q-14/A-14).

So I basically gave this money to my former employer, though I might have technically agreed to a salary reduction rather than allocating pre-tax money to the benefit.

Is there a tax deduction for losing funds this way? I assume it'd be similar to unused FSA funds at the end of the year.

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You already received a tax deduction, more or less, as you didn't pay tax on this income.

Beyond that, no; the money is lost if you don't spend it. See this explanation for example, among many others; it's specific to FSA, but they work generally the same way.

To go into a bit more detail, read the IRS publication on the subject; basically, what's happening here is that you're receiving a fringe benefit, rather than salary. So yes, you agreed to voluntarily reduce your salary by $255 or whatever per month in exchange for funds in this account.

As such, they're nontaxable, which both your employer and you find helpful; but the downside is it's not really your money - it's a fringe benefit. Nice that it's tax free, and dissimilar to a medical or dependent care FSA, it doesn't have an expiration date; but it does go away when you leave your employer, and you don't get it back. It's money you never had.

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