Bicycle Commuter Expenses
Beginning in 2009, employers may reimburse bicycle commuters up to $20 per month tax free for each month a bicycle is used for transportation between the employee's home and place of employment. Reimbursement may be for reasonable expenses incurred for the purchase of a bicycle, bicycle improvements, repair and storage. Bike commuters who receive any other transportation fringe benefit under Section 132 are not eligible to receive the bike commuter benefit. The bicycle commuter benefit was added to IRS Code 132(f) as part of the Emergency Economic Stabilization Act of 2008, signed into law on October 3, 2008.
The bicycle benefit differs from the transit and parking benefit in a few ways:
1. The bicycle benefit may not be funded by an employee’s pretax contributions; instead, it is reimbursed by an employer as a fringe benefit. Because this is a reimbursement, a “bona fide reimbursement” process must be utilized by the employer whereby the employee substantiates the expenses with receipts, or a certification in the absence of receipts, that the expenses were incurred for the eligible purpose.
2. The bicycle benefit may not be received in any month in which an employee receives any other qualified transportation fringe benefit (i.e., transit pass, transportation in a commuter highway vehicle, or qualified parking). Thus, if an employee receives a non-bicycle transit benefit in a particular month, the employee is not eligible to receive the bicycle benefit for the same month, even if the employee commuted occasionally to work using a bicycle during that month.
3. Reimbursement for bicycle-related expenses may be paid for eligible expenses incurred during the year in which the employee commuted by bicycle. Substantiation for the expense must be submitted within a reasonable period of time after the expense was incurred, which is typically within 180 days. These expenses may be paid through a period not to exceed three months following the expiration of the year in which the expenses were incurred. Thus, if the expense is incurred in 2009, the employee has through March 2010 to file for and receive the reimbursement.
4. The bicycle benefit is not tied to the cost of living index, which applies to both transit and parking benefits. Unless amended in the future, the bicycle benefit is fixed at $20 per month.
Read more about this topic: Employer Transportation Benefits In The United States
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