210 likes | 414 Views
The Bike Benefit: An “update”. October 9, 2009 Jeanine DeBacker. Fringe Benefits. Pay for the performance of services Taxable unless IRS has specifically decided it is: Nontaxable Partially taxable Tax deferred If not addressed, must include value in recipient’s pay. Fringe Benefits.
E N D
The Bike Benefit: An “update” October 9, 2009 Jeanine DeBacker
Fringe Benefits • Pay for the performance of services • Taxable unless IRS has specifically decided it is: • Nontaxable • Partially taxable • Tax deferred • If not addressed, must include value in recipient’s pay
Fringe Benefits • Non-taxable • Health Plan Contributions • De Minimis • Partially taxable • Transportation (up to dollar amount) • Tax deferred • Retirement plan contributions
IRC §132f - “QTF” • IRC §132f covers benefits an employer provides to his employees for the employee’s personal transportation • “Qualified Transportation Fringes” • Commuter Highway Vehicle • Transit Passes • Qualified Parking • Qualified Bicycle Commuting Expenses
IRC §132f - “QTF” • Employer-provided QTFs with Fair Market Values that do not exceed monthly dollar limits are: • Exempt from withholding and payment of employment taxes • Not reported as taxable wages on W2 • Not reported as gross income • (Only about employees - not former employees or contractors)
Substantiation • If employer reimbursing employees for QTF, employee must substantiate the amount • This means receipts!
QTF: Commuter Vehicle (Vanpool) • “Commuter highway vehicle” (not the family minivan). • Seating capacity of 6 passengers plus driver. • 80% of mileage use can reasonably be expected to be for transportation/commuter purposes; and • At least 1/2 of the seats filled. • $230 per month maximum • Cash reimbursements by employer must be substantiated with actual proof of commuter vehicle use by employee
QTF: Transit Passes • Pass, token, fare card, voucher, similar item entitling person to transportation on public or privately owned mass transit system. • $230 per month maximum • If employer hands out the passes, no substantiation necessary • If not passing out transit passes, employer can’t give cash reimbursement for passes unless no voucher or similar item is not readily available
QTF: Qualified Parking • Parking provided to employees on or near the business work premises, or parking on or near a location from which employees commute to work by commuter highway vehicle, mass transit station or vanpool. • $230 per month maximum.
QTF: Bicycle Expenses • Emergency Economic Stabilization Act of 2008 (October 3, 2008) (Bailout). • Expanding of qualified transportation fringe benefits (IRC §132(f)) to allow employers to reimburse employees up to $20.00 per month for bicycle commuting. • For each month bicycle is used for transportation between home and place of employment.
QTF: Bicycle Expenses • Employees may exclude reimbursements paid by employers for qualified bicycle commuting expenses. • $20 per month maximum (“$20 times the number of months the employee uses a bicycle for commuting to work”) • Cannot be claimed for any period in which the public transit passes or qualified parking benefit is claimed!
Bicycle Commuter Expenses “Qualified Bicycle Commuting Month” is any month the employee: • Regularly uses the bicycle for a substantial portion of the travel between the employee’s residence and place of employment; and • Does not receive transportation in a commuter highway vehicle, or any transit pass or qualified parking benefits
Bicycle Commuter Expenses • 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.
Bicycle Commuter Expenses • Bicycle benefit may not be funded by an employee’s pretax contributions; it is reimbursed. • “Bona fide reimbursement” process must be used (Substantiation) • At least one company has “Bike Vouchers” • Time limits • Benefit not tied to cost of living index (will remain $20.00 per month).
QTF: Salary Reduction • Instead of employer giving the benefit as additional compensation, employer may simply permit employees to choose to defer a portion of income to purchase a QTF • Not include bicycle benefit
Pre-Tax Transit: IRC §132(f) • “Tax-Free Commuter Benefits.” • Employer-provided voluntary benefit programs that allow employees to reduce monthly commuting expenses for transit, vanpooling and work-related parking costs (and now bicycle benefit). • Monies used for the eligible expenses are excludable from gross income subject to federal (and state and local) taxes.
IRC §132(f)- Maximum Exclusions • $230 per month in pre-tax wages to purchase transit passes or vanpool rides. • $230 per month for qualified parking. • Amounts may only be used to purchase transit or parking. • Can’t use transit amounts for parking and vice versa. • Can’t use untaxed income to purchase anything else.
QTF: Bike Benefits - Status? • No change yet • Seeking clarification (so that can use bike benefit with public transit benefit) • Not likely to increase $20/month
Thank you! Jeanine DeBacker www.wendel.com JDeBacker@wendel.com