One of the provisions in the tax cuts extension deal is "parity for exclusion from income for employer-provided mass transit and parking benefits (sec. 727 of the bill and sec. 132 of the Code)."
These are the transportation fringe benefits offered by many businesses. They typically include reimbursements to employees for the costs of parking, mass transit passes, van pool fees and certain bicycle commuting expenses.
The great thing for workers is that these transportation perks are not counted as part of their income for tax purposes.
In 2009, the American Recovery and Reinvestment Act (the Obama stimulus package) nearly doubled the monthly pretax cap commuters could spend on this benefit. It went from $120 to $230.
The expanded benefit also evened up the tax treatment of employer subsidized mass transit and workplace parking benefits. The change, say supporters, promotes the use of more eco-friendly transportation by commuters.
But this benefit will be reduced next year unless Congress acts, with the monthly cap dropping back to $120.
Luckily for those who must hit the highways to get to work, the bigger benefit is moving closer to passage.
The wordy parity provision noted in the opening paragraph comes straight from the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, better known as the Senate version of the tax cuts extension deal. The Senate agreed yesterday to vote on the full measure, possibly as early as today.
The mass transit provision popped into my head (yeah, I know, scary; just think about what the hubby has to deal with day in and day out) when I saw that IKEA gave bicycles to all 12,400 of its U.S. employees.
New wheels! OK, only two instead of four, but still, new wheels!
There's just one problem. The IRS will likely view this bike boon as a taxable fringe benefit rather than a tax-free gift.
Or, as Mary O'Keefee notes in her blog Bed Buffaloes in Your Tax Code, There's No Such Thing as a Free Bike.
Looks like IKEA should have consulted Oprah for tax advice.
Related posts:
- Bicycling tax break injustice?
- Two-wheeled tax break
- Oprah, cars and taxes … again!
- Senate to vote on tax cuts deal today
- Tax cuts extension deal passes first Senate test
Want to tell your friends about this blog post? Click the Tweet This or Digg This buttons below or use the Share This icon to spread the word via e-mail, Facebook and other popular applications. Thanks!
