The Bicycle Commuter Act; How I Made $960 Tax Free

By Lou Melini

Like most good Americans we want to keep as much money in our pocket and send as little as possible to the government. On January 1, 2009, after nearly 8 years in Congressional hearings, bicycle commuters were entitled to receive $20/month for reimbursement of expenses related to bicycle commuting to work. The Bicycle Commuter Act is part of Section 132(f) of the tax code found in IRS publication 15-B, The Employer’s Tax Guide to Fringe Benefits. This is a tax-free benefit!

Included in this section are allowances for qualified parking programs for cars ($215/month) and use of public transportation or carpooling ($115/month), so $20/month is relatively a small incentive for commuting by bicycle. This year, not surprisingly, the reimbursement for cars went up to $230 and the bus reimbursement went down to $60. Fortunately the bike commuting was left untouched though not raised. You can only receive one of the 3 benefits. So if you receive a discounted bus pass from your employer, you cannot receive the bike commuter benefit. And finally, your employer must agree to participate. This is a fringe benefit, not a mandate.

My employer has gladly(?) sent me a check on the first of every month for the past 4 years. Given my salary, $20/month is not a lot of money. It has paid for chains, cable and housing, brake pads, tires, tubes and chain lube along with a few bike parts. It is more principle than the money; a sense of I being recognized for commuting by bike. My employer decided that I did not need to send in receipts for “qualified expenses” as stated in the Bicycle Commuter Act. So you may need receipts for reimbursement for your employer.

If your employer is having difficulty giving you a well-deserved raise, the bike commuter act is a cheap way of putting some cash in your pocket. There are no Social Security taxes on the money nor payroll taxes taken out. So if you “regularly” ride your bicycle to work and you have “reasonable expenses” related to you bicycle commute, you may want to ask your employer for benefits allowable under the Bicycle Commuter Act.

 

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