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Did you know you could receive a $20 monthly benefit when a bicycle is your primary means of commuting to work? This assumes $20 of bicycle commute-related expenditures such as tubes, tires, bike lights & batteries, cold-weather accessories and even bicycle storage fees.
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First, an employee must regularly use a bicycle for a “substantial portion of the travel between the employee’s residence and place of employment” §132(f)(iii)(I).
Next, the bicycling employee must save receipts related to the upkeep and maintenance of this bicycle. Up to $20 per month can be reimbursed. Receipts are provided to the employer along with a record of bicycle commute use at the end of each month. Payments can be made monthly or in a lump sum up to three months after the end of the tax year.
Although employees can create any sort of recordkeeping procedure, sample forms can be downloaded through the
League of American Bicyclists at: http://www.bikeleague.org/news/100708faq.php
To date, the interpretation of regular use of a bicycle is about 14 days per month (around 3 days per week). Also, the substantial portion of your trip is open to your own employer’s interpretation, but some sources suggest anything over half of the trip length. Basically, if you and your employer agree on what constitutes a reimbursable “Bike Month” then that will work.
For more information from the IRS on how to structure the Bicycle Commuter Benefit at your place of work, see I.R.S.
Publication 15-B (2009), Employer’s Tax Guide to Fringe Benefits, and I.R.S. Publication 15 (2009), (Circular E), Employer’s Tax Guide.
For information on how to claim the reimbursement for bicycle commuting expenses, see: http://bicycling.about.com/od/advocacy/tp/bike_commuter_benefit.htm
Full language of the Bill passed by Congress:
SEC. 211. Transportation Fringe Benefit to Bicycle Commuters.
(a) In General- Paragraph (1) of section 132(f) is amended by adding at the end the following: ‘(D) Any qualified bicycle commuting reimbursement.’.
(b) Limitation on Exclusion- Paragraph (2) of section 132(f) is amended by striking ‘and’ at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ‘, and’, and by adding at the end the following new subparagraph: ‘(C) the applicable annual limitation in the case of any qualified bicycle commuting reimbursement.’.
(c) Definitions- Paragraph (5) of section 132(f) is amended by adding at the end the following:‘
(F) DEFINITIONS RELATED TO BICYCLE COMMUTING REIMBURSEMENT
- ‘(i) QUALIFIED BICYCLE COMMUTING REIMBURSEMENT- The term ‘qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.‘
(ii) APPLICABLE ANNUAL LIMITATION- The term ‘applicable annual limitation’ means, with respect to any employee for any calendar year, the product of $20 multiplied by the number of qualified bicycle commuting months during such year.‘
(iii) QUALIFIED BICYCLE COMMUTING MONTH- The term ‘qualified bicycle commuting month’ means, with respect to any employee, any month during which such employee-
- ‘(I) regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment, and‘
- (II) does not receive any benefit described in subparagraph (A), (B), or (C) of paragraph (1).’.
(e) Effective Date- The amendments made by this section shall apply to taxable years beginning after December 31, 2008.