Friday, January 22, 2010

Green Tax Incentives for Travel (Part II)

In Part I of this post I focused on "Green" tax incentives related to travel/transportation, primarily for the individual. As mentioned in that blog post, the following tax credits are available for both individuals and businesses:
  • New Qualified Plug-in Electric Drive Motor Vehicles Credit (IRC Sec.30D)
  • Certain Plug-in Electric Vehicles Credit (IRC Sec. 30)
  • Alternative Motor Vehicle Credit (IRC Sec. 30B)
The calculation of the credits, certification requirements, and all of the rules are the same for business as individuals with a few exceptions.

First, there is no rule allowing the business portion of any of the credits to apply against individual AMT. Second, business credits carry forward if unused while individual credits fall into the "use them or lose them" category.

Two additional "green" incentives for business are related to fringe benefits for employee commuting:
  1. Transit and Vanpool Transportation Fringe Benefits (IRC Sec. 132(f)(2))
  2. Bicycle Commuters Fringe Benefit (IRC Sec. 132(f))
Under the tax law, an employee may exclude qualified transportation fringe benefits from gross income and wages for payroll tax purposes while the employer is ably to fully deduct these fringe benefits as ordinary and necessary business expenses. The transportation fringes include parking, transit passes, vanpool benefits, and qualified bicycle commuting reimbursements.

Prior to 2009, up to $230 per month of parking benefits and up to $120 per month of transit and vanpool benefits were excludable from income. The Recovery Act (ARRA) increased the monthly exclusion for vanpool and transit benefits to the same $230 per month available for parking benefits.

The Bicycle Commuters Fringe Benefit allows an employer to reimburse a bike commuter up to $20 per month for reasonable expenses incurred by the employee during the calendar year for the purchase, improvements, repair, and storage of a bicycle that is used regularly for a substantial portion of the commute between an employees home and workplace.

Employees are not allowed to exclude from income the bicycle commuting fringe benefit for any month that another transportation benefit is received by the employee. Employers have until March 31 to reimburse employees for expenses incurred int he prior calendar year. Accordingly, you could still provide this tax advantaged fringe benefit to your 2009 bike commuters.

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