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Qualified Bicycle Commuting Reimbursements

Posted on June 13, 2012 by Leasa Magnuson in Business Tax, Individual Tax

Bike to work day is coming up on June 22nd. Questions arise this time of year and especially in Fort Collins if mileage on a bicycle can be deducted the same as mileage on a car. Several of my Fort Collins business owners ride their bikes to work and visit their client’s on bicycles. They would like to get a tax deduction just like their car-owning business partners.

While there is not a mileage deduction for bicycles there is a qualified bicycle commuting reimbursement fringe benefit for employers to give their employees who commute on a bike. It falls under the qualified transportation fringe benefits and works like this: An employer can reimburse an employee for transportation expenses and not be required to add it the employee’s compensation for things like train, bus , ferry or parking passes and expenses incurred by the employee for the purchase of a bicycle and improvements, repair or storage. This exclusion is limited to $20 per month on a bicycle regularly used for a substantial portion of the employee’s commute. Last time I looked you couldn’t purchase a bicycle for $20 or even $240 (12 months of $20 a month), but I guess it is something. The limit for the passes for the car owners is $240 per month. I’m pretty sure in our little community monthly parking passes or bus passes do not come to $240 but perhaps these limits make more sense back East.

Unfortunately partners, S corporation shareholders, sole proprietors and independent contractors cannot exclude qualified transportation fringes.

Bicycle commuting, Bike Mileage Deduction, Bike to work day, Fringe Benefits

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4025 Automation Way #D1 (Map), Fort Collins, CO 80525 - Phone: 970-226-4686