More details on Bike Commuter Benefit

The Bicycle Commuter Benefit offers businesses a low-cost way to improve their benefits package and to encourage their employees to bike to work, and we hope this benefit is soon expanded to match other commuting benefits.

The IRS has supplied guidelines for businesses to implement the benefit, but the law does not provide the same benefits that transit or car commuters have.

Here is the official word:

  • Employers can provide up to $20 per month to encourage bike commuting, making the incentive itself no longer taxable.
  • Expenses can include a commuter bike, upgrades, repairs and bike parking.
  • Be careful: You can’t use the $230 transit benefit (up from $115 thanks to the recently passed stimulus package)or the $220 parking benefit in months when you use the $20 bike benefit.

Transit and parking benefits allow employers to provide benefits in lieu of pay, or permits employees to directly deduct it from their wages, with both sides saving on taxes. That’s not the case with the bike benefit because it cannot be deducted from taxable income. Employers can spend money to create the additional bike benefit program, which we encourage, but payroll and income taxes don’t get reduced, which is a major incentive for similar benefits.

Active Trans wants a better law. We want full pre-tax benefits for bike commuters on par with transit and parking. And because it is a multi-modal world, we want people to be able to combine the transit and bike benefits at the same time.

What you can do: Educate your employer on this provision. Stress that it is an effective way for businesses to be green and help their employees stay happy and healthy. Employers that provide transportation fringe benefits have noted reduced stress from not driving, increased job satisfaction, improved on-time arrival and enhanced productivity.

 

ADP Is not bike friendly

I just spoke to my HR department. We use ADP, and the word on the Bike Commuter Benefit is that ADP - the largest payroll processor in the country - cannot (will not?) process the benefit.

Bummer that they won't make this easy either.

Not surprising. There really

Not surprising. There really isn't a critical mass out there (pardon the pun) yet to force ADP's hand. Until demand gets high enough, I wouldn't expect the bigs to make changes. Accor Services is a third-party transit benefit provider that was an early adopter of the bike benefit. They just took their existing Transit Check system and created a Bike Check that functions similarly. They're also extremely helpful, and are advocates for better transportation options. http://www.commutercheck.com/Home.aspx

How do I sign up for this?

I have researched this bill for quite some time, but I still do not know how to get reimbursed? I bicycle everyday to work, but I do not know what forms or steps I need to take to get this tax break. Thanks!

More on Bike Commuter Benefit

The only way to take advantage of the benefit is if your employer actually funds the reimbursement themselves. You'll need to appeal to your employer's HR dept. to fund and implement the bike benefit. It's voluntary on the part of the employer - just like other commuter benefits (pre-tax transit passes, parking reimbursement, etc.), but they have to fund it as an additional fringe. It cannot be taken as a payroll deduction, unlike the transit benefit. This has been a major drawback for most employers, who (understandably in this economy) would have trouble funding a new fringe benefit, especially if they have a high number of employees. Many folks I've talked to who are advocating for the bike benefit run into a wall here.

The benefit may be paid out as a flat amount per month (rolled into paychecks, say), on a dollar-for-dollar reimbursement basis, or through a third party provider by way of 'bike checks' - just like commuter vouchers that are currently available..

Here are some resources to direct your HR department to:

IRS guidance: http://www.irs.gov/publications/p15b/index.html (section 2, under Transportation Benefits)

FAQ from the League of American Bicyclists: http://www.bikeleague.org/news/100708faq.php

Bike Commuter Tax Reimbursement Card template (for employees to sign and turn in to 'prove' they biked that month - also from the League): http://www.bikeleague.org/resources/commuters/reimbursement_cards.php

Commuter Check for Bicycling info, from Accor Services: http://www.commutercheck.com/employers/Products.aspx#b

Additionally, Rep. Earl Blumenauer from Oregon introduced HR 863 in February 2009, that would sweeten this benefit and also allow the payroll deduction option. It also would allow both bike and transit benefits to be taken in the same month. More info here:
http://www.govtrack.us/congress/bill.xpd?bill=h111-863.
No real buzz on when/how the bill would be passed (i.e. glommed onto another piece of legislation like the Climate Bill). It's been assigned to committee - that's about it.

What is most confusing about

What is most confusing about the benefit is logistically how it is being implemented at different workplaces. How are employers to provide the $20 per month benefit, particularly if it is not the same as the public transportation or parking portion of the IRS Fringe Benefits package? Unfortunately, this post leaves me more confused than ever.

correction

i just updated this post with more accuate info on the transit benefit. turns out the stimulus package extended the transit benefit to $230 from $115.

Thanks!

Thanks for sharing these details!

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