I’m a writer and have belonged to a critique group for close to 15 years. Yesterday, we all got together – something we try to do a few times/year. Often, we just meet at someone’s house, but last night we went out for dinner (a very early dinner, so we could all get home to watch the final (thank God) debate).
So, how did I save money by going out for dinner?
Well, I didn’t really. I would have saved money by NOT going. But, then, you’d save a lot of money if you never did anything wouldn’t you?!
What I did that will save me money, come tax time, is keep the receipt, and record both what I spent ($24) and the mileage to get there and back.
Since I pay taxes on the royalties I earn, it’s in my best interest to keep track of all expenses and mileage I incur so I can deduct them come tax time. No sense paying more than necessary!
Meals can be deducted at 50%. So, depending on my marginal tax bracket, I will get to keep 50% x $24 x ??%. Assuming a 25% marginal tax bracket, I will save myself $3 in taxes come April.
Plus, I drove 12 miles round trip. I think the current mileage rate is about $.55/mile, so I will also get to claim $6.60 for mileage. Again, at a marginal rate of 25%, that’s another $1.65 in savings.
That makes $4.65 I will save at tax time if, and only if, I take the time to record and report it – for one meal.
This morning I’m driving out to one of our rentals to pick up a rent check. Don’t get me started on these tenants. Anyway, it’s 39 miles round trip. You do the math.
The devil is in the details.