Search

The More I Drive, the More I Save?

danielkatz919
Apr 18, 2015
2 min read

We Realtors drive... A LOT!!! Now this is not news to any of us. What might come as a surprise though, is the fact that we might be "making money" while driving nowadays. Yup, considering gas prices and the tax break we get per business mile driven, driving might be helping us make money. As explained by Daniel Diaz de la Rocha CPA, Here's how it works….

Let's say your car gives you 20 miles to the gallon. In 2015, the government allows a 57.5 cents deduction per mile driven for business purposes. So let’s look at an example of a Realtor driving 10,000 miles per year as follows: 10,000 miles at .575 per mile = $5,750 Auto Deduction Actual cost of fuel: $1,300 (10,000 / 20 mpg =500 gal @ $2.60 each) Tax Deduction Benefit = $2,012.50 ($5,750 x 35% tax rate)* * Considering the Realtor is in the 35% tax bracket Notice how the tax benefit exceeds the cost by $712.50 (2,012.50 less 1,300.00) This is the cash available for insurance, tag, and monthly payments. Often times the actual expense of maintaining a vehicle exceeds the per diem rate deduction which means you should be providing your accountant with details of you “actual expenses” for purposes of the deduction. There are other considerations, however, for purposes of claiming a mileage per diem deduction. In order to claim miles for business you must own your car (not lease) and there are very specific records to be kept and certain rules to follow. Ask your accountant about all this. You'll be happy you did! Daniel Diaz de la Rocha, CPA can be reached at: 290 NW 165 St., Mezzanine 100 Miami, FL 33169 Tel.: 305-949-9155 Fax: 305-847-8550 Thank you Dan!