Editor’s Note: Today I’m featuring a post from my buddy Nick at Side Hustle Nation. I recently went on Nick’s podcast to discuss what it’s like to be a rideshare driver and one of the topics we got to talking about was tax deductions for small business owners. I guess our chat must have been inspiring because within a couple weeks Nick had this post ready for me. Take a look at the post and then hop on over to Nick’s site and let us know what you think!
(For CAN-SPAM compliance, every email newsletter I send out must have a physical mailing address included, and I felt weird broadcasting out my home office address to hundreds of people I’d never met.)
In my town, the cost for the PO Box rental is $50 for 6 months, or $100 for the year. I guess the post-office hasn’t heard about pre-payment discounts.
But instead of looking at it as a cost, I realized I opened myself up to a new tax deduction opportunity. Of course, the box rental fee itself is deductible as a business expense, but the mileage I drive to check it is too.
The Post Office is downtown, about 3.6 miles away from our house, and I end up going downtown at least a couple times a week to meet with friends, play softball, or go out to dinner.
Now, as long as I check my PO Box, each of those trips can count as business mileage and are deductible at the rate of $0.565 per mile in 2014.
Disclaimer: I’m not a CPA or tax attorney, and there are stipulations on this. For instance, if you don’t qualify for a home office deduction, you will not qualify for this kind of business mileage.
If I make two visits a week, 50 weeks a year, at 7.2 miles roundtrip each time, that could add up to a $403 deduction come tax filing time.
3.6 miles x 2 (roundtrip) x 2 days a week x 50 weeks a year x $0.56 per mile = $403
At an estimated 25% tax rate between state and federal, I’ll break even on the PO Box rental. (The actual tax rate may be higher or lower, but I use 25% as my general estimate.)
Could you use a similar system to help save money?
How about if you’re still working, but run a home-based business on the side? Could you find a Post Office location near your day job office?
All of a sudden, your daily commute could become a write-off. If the average commute is 12.6 miles each way, and you visit the office 5 days a week 50 weeks a year, you could be looking at a $3500 deduction!
12.6 miles x 2 (roundtrip) x 5 days a week x 50 weeks a year x $0.56 per mile = $3528
Even if you don’t have the need to open a PO Box for privacy reasons, the cost may be more than offset by the deduction benefits.
PO Box rental fees vary by location, so check with your local Post Office to see what it would cost. In one location I lived, it was actually free because they didn’t do any door-to-door delivery.
If you qualify for a home office deduction but still regularly drive near a Post Office, it’s easy to see how this strategy could significantly reduce your tax bill.
And if nothing else, it will get you thinking about what other mileage you may be able to deduct!
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Nick Loper is an author, online entrepreneur and lifelong student in the game of business. His latest role is as Chief Side Hustler at SideHustleNation.com, a growing resource and community for aspiring and part-time entrepreneurs. Ready to hustle? Grab Nick’s free report on the 5 Fastest Ways to Earn More Money here.