Start Documenting Bicycle Expenses?

Thu December 18 2008
Posted Dec 18, 2008
7,698

By Howard Wolosky, Editor-in-Chief, Practical Accountant | If you haven’t already, you might shortly be asked, “What are the tax implications of riding a bicycle to work?” And your answer will be for taxable years beginning after December 31, 2008, under Section 132(f)(5)(F)(i) a ”qualified bicycle commuting reimbursement fringe benefit” will be considered a qualified transportation fringe benefit. And what is a “qualified bicycle commuting reimbursement fringe benefit?” It is an employer reimbursement for reasonable expenses incurred by the employee during the calendar year for the purchase and repair of a bicycle, bicycle improvements, and bicycle storage, provided that the bicycle is regularly used for travel between the employee's residence and place of employment. The maximum amount that can be excluded from an employee's gross income for a calendar year on account of a bicycle commuting reimbursement fringe benefit is equal to the product of $20 multiplied by the number of the employee's qualified bicycle commuting months for the year. A qualified bicycle commuting month means with respect to an employee any month for which the employee doesn’t receive any other qualified transportation fringe benefit, and during which the employee regularly uses a bicycle for a substantial portion of travel between the employee's residence and place of employment. I can’t wait to see the regulations on this law change and how extensive they will be. Purchase, repair, and storage I think I understand, but I am dying to see what will be considered a valid bicycle improvement. Mirrors or warning lights, I’m sure will be okay, but what about decorative lighting, art work, cards to attach to the spokes of a wheel to provide noise, or a GPS system? More importantly, exactly what type of documentation will be required?