Can I Claim a Leased Vehicle on My Tax Return?

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You can choose between actual expenses or the standard mileage rate.

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by Contributing Writer

Business Use of Car

Business vs. Personal

One simple method of determining the percentage of your business use of your leased car is to keep a mileage log. The IRS doesn't specify any particular type of record, as long as it is accurate and understandable should you have to document your expenses in case of an audit. Add up your total business miles, then divide that number by the total miles driven for the year to determine the percentage of business usage. Multiple your total expenses by the business use percentage to determine the amount of your deductible expenses.

Employee Business Expenses

If you want to take a write-off for

operating your leased vehicle for business purposes as an employee, you'll have to itemize your deductions. Add your business use of car expenses to your other unreimbursed employee business expenses and report the total amount on Line 21 of Schedule A, Form 1040. Unreimbursed employee business expenses, including business use of car, are subject to the IRS' 2 percent rule. You can deduct only the amount of those expenses that exceeds 2 percent of your adjusted gross income.

Self-Employed Business Use

If you used your leased car as part of a business you own, you should report your expenses on Schedule C, Form 1040. All of your qualifying business car expenses are deductible, regardless of whether you itemize your deductions or claim the standard deduction.

Actual Expenses vs. Standard Mileage Rate

Source: people.opposingviews.com

Category: Taxes

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