A week ago, I attended a memorial service for one of my dear clients. This person lived a full life and died of natural causes. This person had passed away earlier this year, but they just held the memorial service last week. As I drove home from the service, I thought of our previous conversations and her intellect and knowledge of the world after living and teaching in Egypt for some time with all her travels.
As I drove on, my thoughts normally turned to…what else,...taxes. It was twenty-four miles to the memorial service and another twenty-four back home. I wondered how many times people miss these short drives and deducting it for tax purposes. Let's look at the calculation:
Twenty-four miles times 55 1/2 cents, (which is the new allowable mileage rate) means, that I get a tax deduction of $26.64. When I take into consideration my federal, state and social security bracket, this $26 saves me right at $11 in income taxes. Eleven bucks in my pocket because I'm paying fewer taxes. I never stop there. I always try to think of how much money I would have to earn to have the tax saving in my pocket. Given that it takes me about $18 before tax dollars to have $11, this is a deal.
I say over and over again, "It's not the big items that cause the tax savings, it's the little items that add up."
The message: Don’t forget to deduct all of your miles,…even the short trips.
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