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Up in smoke    Tax planning?  Yes, bear with me for a second! Let’s look at a tax planning tip.

Ok, I’m not going to preach about the benefits of quitting smoking.  We all know that smoking is unhealthy.  But, with the cost of living rising and the fact that it is getting harder and harder to make ends meet in the United States, I WILL preach about the cost of cigarettes.  It’s for your own good 😉

I know, in the back of your mind, you have thought about the money you spend on cigarettes. But, let’s do the math.  (You know it was coming, I’m an accountant after all!!  And, I do tax preparation and planning for a living.)

Ok, the average cost of a pack of cigarettes in all US states in 2015 was $5.51.  I’m sure it’s more now in 2017.  In Massachusetts, where I practice accounting and tax preparation in Plymouth, a pack of cigarettes cost around $10.00.   You can check out the Cost of Cigarettes per state here.  You’ll see that the Cigarette Excise Tax by state considerably adds to the total cost.

So, if you smoke a pack of cigarettes per day, 7 packs per week at $5.51 a pack…

That’s $38.57 per week.

It’s $167.14 per month.

And, you pay a whopping $8,691.28 per year.  Yikes!!!!

Let’s think about that for a minute. $167.14 per month would get you a decent car; you could start that retirement fund or pay off those credit cards.  With $8,691 per year you could go on a nice vacation, save for your kid’s college, put a roof on your house, and go skiing.  In 5 years you would have $43,456 to put towards a down payment on a house.

If you are interested in saving taxes, retirement funds and college funds have tax advantages and the interest you pay on a mortgage is tax deductible.

See, there you have it; by quitting smoking you may be able to save money on taxes. Beautiful! And that’s your tax planning tip for the day.

by Lauren Bakken CPA, Plymouth and South Shore, Massachusetts