|
Tax
Tidbit #1
How
To Turn Non-Deductible Commuting Mileage Into A
Tax-Deductible
Business Expense
by
Wayne Davies, EA
For most
folks, commuting mileage is a non-deductible expense -- unless you
know the little tax trick I'm about to reveal.
The
non-deductibility of commuter miles is painfully true for the
employee who fights rush hour traffic every day, twice a day, for
5 to 10 hours a week.
All that
hassle, and what does he have to show for it?
Just gas
money down the drain, not to mention the wear and tear on both his
vehicle and his stress-o-meter.
You can
deduct virtually all your mileage, including the miles you log
from your home to the office or other place of
business, if you meet the following two criteria:
1. You are a
small business owner or self-employed person, and
2. You have
two offices or work locations: one outside the home (Office #1)
and one inside the home (Office #2).
Having two
offices is very common for today's self-employed professional. The
store owner, the shopkeeper, the salesman, the plumber, the
consultant -- all these folks are typically self-employed and have
two offices: one where they meet with the public (Office #1), the
other at home, where they get their paperwork done (Office #2).
Here's how it
works:
Every day you
get up and "go to work." But you don't
get in the car and drive to Office #1 right away. If you
did that, even as a self-employed person, you would be racking up
non-deductible commuting miles, just like the employee.
Instead, you
grab a cup of coffee and head to Office #2 first, which takes all
of 30 seconds.
After working
in Office #2 for awhile, then you hop in the car and head to
Office #1, where you work for the bulk of the day.
Then, when
you're done at Office #1, you get back in the car and go
"home" -- except when you get inside your house, you
don't head for the living room, you go straight to Office #2,
where you finish up your daily routine with a few final minutes of
paperwork.
What have you
just done?
You daily
round-trip "commute" is now a business deduction, due to
a simple tax loophole that says: Any miles driven between two
business locations are deductible business miles.
The fact that
one of those two locations just happens to be your Home Office is
fine and dandy with the IRS.
By following
this route each day, you can save hundreds, even thousands of
dollars in taxes.
The proof is
in the pudding:
Let's say
your round-trip "commute" is 20 miles per day.
20 miles X 5
days = 100 miles per week.
100 miles per
week X 50 weeks = 5,000 miles per year.
5,000
business miles X 55.5 cents = $2,775 deduction
(NOTE: 55.5
cents per mile is the IRS standard mileage rate as of the time of
this writing. By the time you read this, the rate could be
different, so check the IRS website to get the current rate, in
the event that it might be different.)
So you just
got yourself a nice $2,775 deduction -- a deduction that you've
probably been entitled to for years but didn't know it.
$2,775
deduction X 30% income tax rate = $833 in actual tax
savings (25% federal tax + 5% state tax)
$833 bucks. . . every year. . . . . .
Hmm, mmm,
good! Now that's a tasty little morsel!
Hungry for
another Tax Tidbit? This article is part of a 5-article
series:
Tax
Tidbit #1: http://www.YouSaveOnTaxes.com/tax-tidbit-1.html
Tax
Tidbit #2: http://www.YouSaveOnTaxes.com/tax-tidbit-2.html
Tax
Tidbit #3: http://www.YouSaveOnTaxes.com/tax-tidbit-3.html
Tax
Tidbit #4: http://www.YouSaveOnTaxes.com/tax-tidbit-4.html
Tax
Tidbit #5: http://www.YouSaveOnTaxes.com/tax-tidbit-5.html
Have
you heard about the recent tax law change that turned a small
business loophole into a crater?
http://www.YouSaveOnTaxes.com/tax-crater.html
Want
to know the biggest tax mistake you can ever make? (And how
to avoid it?)
http://www.YouSaveOnTaxes.com/tax-mistake.html
Do
you know why the most important business decision you
probably never made is the key to paying thousands less in taxes?
http://www.YouSaveOnTaxes.com/tax-decision.html
About The
Author:
Wayne
M. Davies is author of three tax-slashing eBooks for small
business owners and the
self-employed:
** The Tax Reduction Toolkit **
29
little-known but perfectly legal strategies to reduce your taxes,
postpone your taxes, and even avoid taxes altogether -- for small
biz owners & self-employed people only!
http://www.TaxReductionToolkit.com
**
Incorporation Tax Secrets Revealed **
How to save thousands in taxes by
forming a corporation or LLC for your small business or
self-employment activity. Discover the #1 Tax Secret of the Rich!
http://www.IncorporationTaxSecrets.com
**
How To Incorporate Yourself For Free **
How to
avoid paying $500, $1000, $1500 or more in lawyer fees by
incorporating your small business all by yourself...for FREE!
http://www.HowToIncorporateForFree.com
Wayne's eBooks are available separately, or
at a discount as a 3-volume set:
**
The Ultimate Small Business Tax Reduction Guide **
Find out just how easy (and legal) it is to reduce your
taxes by $2,000...$3,000...$4,000 or more!
http://www.SmallBusinessTaxReductionGuide.com
To
receive a free copy of Wayne's 25-page Special Report,
"How
To Instantly Double Your Deductions"
click
here:
http://www.YouSaveOnTaxes.com
www.YouSaveOnTaxes.com
A
Division of Wayne M. Davies Inc.
4660
W. Jefferson Blvd., Suite 220
Fort
Wayne, IN 46804
(260) 459-3858
Wayne@YouSaveOnTaxes.com
http://www.YouSaveOnTaxes.com
http://www.MagneticMarketing.biz
Return To Home Page
|