Bereaved Families Who Received MTA’s $500K COVID Death Benefit Face A Hefty Tax Shock


Some beneficiaries of the MTA’s COVID loss of life profit program are getting sticker shock now that it’s tax season. The beneficiant profit, touted as a $500,000 fee for shedding a member of the family, finally ends up being considerably much less after taxes. That’s due to the way in which the MTA accounts for the cash, treating it as a payment for companies.

The MTA was conscious of the potential tax prices going through beneficiaries, so it pushed for a last-minute change to state tax legislation within the funds that handed this week. The brand new provision exempts New York state residents from paying state taxes on the profit, however beneficiaries are nonetheless on the hook for federal taxes, which might be as a lot as 37%. And beneficiaries who reside out of state nonetheless need to pay native and federal taxes on the profit as if it have been a part of their common earnings.

This implies beneficiaries like Phoebe von Satis, 28, who lives in Los Angeles, and whose father Peter Petrassi was the primary MTA employee to die of COVID, may pay as a lot as 40% of the profit again in taxes owed. She even acquired a 1099 from the MTA, one thing freelancers usually obtain.

“They’re claiming that it’s taxable however I really feel like that’s flawed within the sense that the majority loss of life advantages are not-taxable being that it’s from like a life insurance coverage,” Von Satis stated.

Loss of life advantages from different metropolis companies, such because the NYPD or FDNY, don’t get taxed the identical method. The MTA is, nevertheless, the one company within the metropolis that’s providing this a lot fee in a lump sum to any employee’s household.

The MTA has paid out $44 million in COVID loss of life advantages and 132 households have both been authorised or been paid. Up to now, 158 MTA employees have died from COVID.

“These people held jobs that supported their households and their absence brings not simply super grief, however monetary hardship as effectively,” MTA Chairman Pat Foye wrote in an announcement after Albany authorised the tax plan Wednesday evening. “This tax exemption acknowledges the super sacrifices made by the MTA workforce through the pandemic and we have been proud to advocate on their behalf to assist obtain this vital recognition of their sacrifices.”

The MTA’s loss of life profit program was rolled out shortly. Somewhat greater than a month into the pandemic, in April 2020, it was clear the virus was having a disproportionate influence on the MTA’s workforce. Already, 59 transit employees had died after catching the virus, and as important employees transporting different important employees, the MTA wanted them to place their lives in danger to proceed working the trains and buses.

So, the Transport Staff Union stepped in and acquired the company to increase its line of obligation loss of life profit to any employee that died of COVID. As much as that time, solely six employees’ households had ever obtained this profit, which was normally prolonged for on-the-job deaths, like being hit by a prepare or electrocuted. And the union, in a just lately negotiated new contract, acquired the company to extend the profit from $250,000 to $500,000. The MTA agreed to increase this profit for COVID deaths, irrespective of the place the employee caught it.

“We consider that beneath the horrific, surprising and extraordinary circumstances of this pandemic, that’s an applicable factor to do given the lack of life that has occurred,” MTA Chairman Pat Foye stated in mid-April 2020 at an MTA press convention.

Black and white photographs of Peter Patrassi; on the left, he waves at the camera while wearing a WFAN Sports Radio t-shirt, on the right, he is wearing a button down shirt and smiling at the camera


Images of Peter Patrassi

Courtesy of Phoebe von Satis

However lawyer Robert Grochow, who helps households who misplaced relations on 9/11 or later on account of sickness entry the Sufferer Compensation Fund (VCF), believes the MTA may’ve characterised the funds in a different way. It didn’t need to ship the households a 1099 at tax season.

He stated the MTA’s COVID loss of life profit could qualify for federal tax exemption beneath the identical laws created after 9/11 that made VCF loss of life advantages exempt as effectively, for the reason that MTA did obtain numerous federal cash for its working funds final 12 months, and this 12 months.

“I might suppose, if the MTA will get a greenback from the federal authorities, they usually’re utilizing it on operational prices, after which additionally from the identical checking account they’re paying the estates of the deceased staff… it then turns into an accounting characteristic how their inner accountants select to categorise how the cash got here in, and the way the cash went out,” Grochow stated.

At the very least 5 relations of deceased employees who obtained the MTA’s COVID loss of life profit—and didn’t know one another earlier than—are working with an lawyer to determine for themselves easy methods to keep away from paying such a excessive price of federal taxes on the funds.

One in every of them is von Satis, who had been hoping to make use of it to place a down fee on a home and assist fund a legislation college diploma.

One other is Ashley Elijah, 30, whose father, 18-year veteran observe employee Scott Elijah, died final 12 months. She hasn’t obtained the cash but as a result of she’s nonetheless finalizing paperwork to be head of her father’s property. She lives in New York, and welcomes the newest information about adjustments to the tax legislation.

“It makes me very joyful, I actually respect that,” she stated. “I hope the strain from me and the opposite [beneficiaries] put issues in perspective and I hope we’ll be capable to struggle the federal authorities.”

A spokesperson for Senator Chuck Schumer didn’t return emails in search of touch upon whether or not he would push any laws for tax aid on the federal degree. However his workplace has beforehand famous that previously 12 months, Schumer has labored to safe $14.5 billion in aid help for the transit company.

The president of the Transport Staff Union, Tony Utano, stated congress ought to take motion to exempt the MTA’s COVID loss of life profit from federal earnings taxes.

“If the state can do it, so can the federal authorities,” Utano stated. “Authorities shouldn’t be taking cash from heroes’ households. They’ve suffered an excessive amount of and deserve all of the help society can muster.”