The Feds would like to help pay off your Cambridge biking tickets
By Kaz - 1/5/09 - 3:32 pm
Do you bike a substantial portion of your commute and don't receive any compensation for public transit or parking compensation from your employer?
Then, The Green Blog at the Boston Globe would like to introduce you to a $20/mo benefit that Congress has cooked up for bicycle commuters starting January 1 this year. The details are given on Representative Earl Blumenauer (D-OR)'s website. Essentially, your employer will agree to give you $20 tax-free compensation per month under section 132 of the tax code for transportation fringe benefits that do not apply to your gross income calculation for federal taxes.
Comments
Benefit To The Employer?
I understand how this would be a swell thing for the person riding the bike, as well as nice for the overall greenness of the world, but is there any benefit to the employer aside from having a happier worker?
(I'm not denigrating that aspect. I'm just asking if there is an obvious monetary incentive. I didn't see one. Did I miss it?)
Suldog
http://jimsuldog.blogspot.com
Not that I see
I see this as more like righting a wrong that was introduced with this pre-tax allocation for transportation that was created for workers. I bike/scooter and so I use a bike rack when I arrive at work (thus I get no compensation pre-tax for parking fees). I bike/scooter so I have no need for mass transit (so I get no compensation pre-tax for any mass transit pass/fares). Up until now, all of my income was taxed and I got nothing to help support my biking in the same way drivers or public commuters do.
Now, those people will get $20/mo to support their bike in the same way a subway rider gets $59/mo for the LinkPass or a driver gets compensated for their garage fees at work.
(n.b. - Personally, I have been commuting by scooter and also collecting on the MBTA pass reimbursement for those days when scootering is not possible and will probably continue that way)
But where are your costs for biking?
The pretax benefit simply allows us to use pretax dollars to pay for certain commuting expenses. I don't get $59 dollars per month for my pass, it's withheld from my paycheck before taxes are calculated. Then each month I get to use my own money previously withheld to buy my pass.
Now if you wanted to take $240 of your own money out of your own paycheck and use that for bike expenses (tune ups, tires, whatever) that would be the same.
Mostly
That's $60 you don't have to report on your taxes each month ($20 in the case of the bikers). Also, of the few employers I have had, they have all given this above and beyond my payroll (because it is such a small amount and make it easier to say "your salary is some nice round number in the thousands, so why make it more confusing by taking this off the top...whenever you reimburse for it". The company can instead reimburse you and just not report it for taxing purposes on the W-2.
Either way you are getting a benefit, albeit saving $240 gross on your federal taxes isn't the biggest kickback in the world, no.
Ah, that's where the difference is
You're assuming that everyone gets that $60 (or whatever) as extra income from their employer on top of their salary. If that's the case, then yes, bikers deserve something similar. But I'm pretty sure that's not true for most employers, particularly larger ones.
Nah
I recognize that everyone doesn't; it's not an assumption I'm making. I wrote as much in what I just said. It's still un-taxed instead of from your taxed amounts even if your employer wants to include it as part of your salaried amount as opposed to on top of quoted salary.
Either you make $30,000 and get an extra $240, bringing your total to $30,240 but only $30,000 reported in taxes. OR you make $30,000 and the $240 comes from it, bringing your total to $30,000 but only $29,760 is reported in taxes.
If you are making $30k and having "transportation costs" deducted from that total but your employer is still reporting your gross income as $30k, then you are being robbed by your employer because those reimbursements fall under section 132 and are not supposed to be taxed. The taxes on the $240 (for bikers) may be small but they should not have to be paid.
Any support for mass transit?
This is a little too "sweetness and light" even for me. Biking is great and all, but how about some support for underfunded mass transit system first, 'kay? I'm really hoping our President-Elect decides to fund some of the transportation infrastructure improvements to help stimulate the economy. As inept as the MBTA is, they aren't done any favors by a funding structure designed to underfund the system.
There's already a mass-transit tax break
in the form of the employer deducting pre-tax money from your paycheck, and putting it into a special account from which you buy a monthly transit pass. I believe you can only claim the bicycle benefit if you aren't using the transit benefit.
Examine your privilege BStu
You get your tax break for mass transit if you buy your pass through your employer. Nuff said.
People who walk, bike, rollerblade, etc. get no such tax break.
You Got?
Anon privilege
You want privilege, try posting anonymously to bash people.
Oh, and also try again. Because I get no such tax break because not every employer offers that kind of pre-tax purchase of a T pass. And even under the new plan, when I DID walk to work for 2 years, I would have gotten nothing.