How to Claim Your Bicycle Commuter Tax Credit
Unless you’re a tax code attorney or accountant, there’s pretty much no way you’re going to understand what the benefits available to you are…and forget about any non-cycling employer or HR person taking the time to figure out something for a mere $20 per month credit.  I just read it, as soon as I thought it made sense…the IRS threw some jargon in there to mix it back up.
Fortunately, the League of American Bicyclists has a Q&A that starts to clear it up, and they promise to update it frequently.  Click here, then scroll about halfway down the page.
In case you’re wondering what the benefit is, it’s two-fold.  You get up to $20/month as reimbursement for expenses related to riding your bike to work.  You’re employee saves on payroll taxes that would otherwise be paid on that $20.  If there are a lot of cyclists at your company, it could add up for them.  To make it easy on your employer, recommend that they check out this program from Accor.
Unfortunately for the self-employed, we can not claim ourselves as “employees” when it comes to issuing a credit to ourself.  Super lame.
Comments
” You’re employee saves on payroll taxes that would otherwise be paid on that $20″ huh? what r u saying with this sentence?
I only play accountant, so take this for what it’s worth: It means that your employer pays matching taxes on anything they pay you…so what you see being deducted as being withheld (except, I think, SS and MEDICARE) is what you pay in income tax. Your employer pays that same amount again for the privilege of having you as an employee. The $20, from what I understand, can be deducted from the taxable wage base, meaning that neither you nor your employer would pay income tax on it.
Any accountants out there that would like to confirm this?
Another related note/rant: That’s why employers like to have independent contractors…they don’t have to withhold and pay the taxes on that payroll, the contractor does. That’s also why independent contractors pay ridiculously high taxes because they have to pay that “matching” income tax themselves. This is a pretty rudimentary explanation, but something to consider before you a) hire someone or b) strike out on your own.