Why Keeping Track of Mileage Can Lead to Hidden Tax Savings

By Tom Nonmacher

Hello, fellow thrifters! If you're a regular here at eTHRIFT.net, you know we love uncovering hidden ways to save money. Today, we're diving into a topic that often goes unnoticed but has the potential to save you a significant amount on your taxes. That’s right, we're talking about the mileage you rack up on your vehicle, and how keeping track of it can lead to hidden tax savings.

Let's start with the basics. If you use your vehicle for business, medical, charity or moving purposes, you can deduct the costs associated with that usage on your tax return. This includes the miles you drive! The IRS allows taxpayers to write off a certain amount per mile driven for these purposes. The rates change every year, but for 2021, the rate is 56 cents per mile for business, 16 cents for medical or moving purposes, and 14 cents for service to charitable organizations.

Now, you might be thinking, “I don’t drive that much for work or medical reasons, so this doesn’t apply to me.” But hold on a minute! Even if you only occasionally use your car for these purposes, those miles can add up over a year. And every bit you can deduct helps to reduce your taxable income. Think about it: if you drive 1000 miles for business in a year, that's a $560 deduction at the current rate.

So, how do you keep track of your mileage? It's easier than you might think. You don’t need to carry around a notebook and jot down your odometer readings. Many apps can track your mileage for you. Just set it and forget it! These apps often allow you to categorize your trips, making it easy to separate business trips from personal ones. At the end of the year, you'll have an accurate record to use for your tax deduction.

But here's a crucial tip: be honest and accurate with your mileage tracking. The IRS has strict documentation requirements, and if they decide to audit you, they will expect to see a detailed log of your trips. That's another reason why using a mileage tracking app can be so beneficial. It does the heavy lifting for you, ensuring you have the proof you need if the IRS comes knocking.

In conclusion, keeping track of your mileage is a simple yet effective way to uncover hidden tax savings. It might seem like a small thing, but when it comes to managing your finances, every little bit helps. So, start tracking your miles, and see how much you can save on your taxes this year. Remember, saving money is not just about cutting costs; it's about making smart choices that maximize your income. And at eTHRIFT.net, we're here to help you do just that!

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