$700 billion plan offers tidbits to bike commuters

When Congress put together a $700 billion bonanza for big people who ride limos to work on Wall Street, it threw in a $20 tidbit for little people who ride bikes to work on Main Street.

Millions of commuters already enjoy tasty tax breaks for taking the bus to work, or for driving their cars and parking there.

Starting in January, bicycle commuters will qualify for crumbs from the same cake.

The legislation is less generous than some bikers hoped when they read in The New York Times about a "cycling tax credit" that would give them up to $20 a month to spend on bikes, helmets and other bike expenses.

"They have incentives already for people who van pool or take the bus, so we're going to do everything in our power to get this implemented here," said Pablo Torres, who heads a cycling club at RTI International in Research Triangle Park.

The new law turns out to be more of a tax deduction than a tax credit. It allows bikers -- if they qualify, and if their employers agree -- to forgo taxes on up to $20 of their monthly wages.

That's worth just $6 a month or $72 a year in tax savings for the average worker, who pays 30 percent in state, federal and FICA taxes, according to Mario Flores of Charlotte-based Flores & Associates, which administers employee benefit programs. Employers will also save the 7.65 percent FICA tax they pay on the same wages.

"Unfortunately, the $20 cap they put on it is almost minuscule," Flores said.

For years, Congress has let American workers skip taxes on part of their wages spent for parking at work or commuting by bus and van pools. Under a similar program, workers can also set up a flexible spending account with "pre-tax" pay for medical and child care expenses. According to inflation-indexed rates set to rise in January, commuters qualify for monthly tax-free reimbursements of up to $120 for van pools and transit passes, and up to $230 for parking.

Congress added the $20 bicycle provision to the $700 billion Wall Street rescue package approved in September. It was one of several unrelated items added as sweeteners to win more House and Senate votes.

The new bicycle benefit is available only to workers who do not enjoy other commuter perks.

"If your employer is subsidizing your parking or your mass transit, or you're paying for them on a pre-tax basis, you cannot use the cycling reimbursement," Flores said.

The Internal Revenue Service has not announced rules for bike commuters. Flores expects the program to work something like this:

The employee would say in an affidavit that he or she regularly travels to work by bike. Up to $20 a month in pre-tax pay would be diverted to a special account -- like the flexible spending accounts some workers use for child-care costs.

Later, the employee would seek reimbursement from this account for bike repairs, equipment and other expenses.

There are plenty of questions to be answered. How often must you bike to work to qualify? Must you keep receipts for every expenditure?

"You have to be really a pure bicycle commuter for it to make sense for you," said John Tallmadge, commuter resources director for Triangle Transit.

A $20 monthly allowance for bike commuters isn't much, he said, but it's a start.

"This gets a foot in the door for bicycle commuting," Tallmadge said, "to acknowledge, if someone is commuting by bike, that there are expenses associated with that."

Teen crash talk

Johnston County leaders invite the public to a forum on teenage driving safety at 7:30 p.m. Thursday at the county Agricultural Center on N.C. 210 in Smithfield. School, law enforcement and state transportation officials will take part.