One of the most common questions I get every day in my office is : “Is Leasing a car a good tax deduction for my business?”. Yes but. Isnt that always the answer when it comes to taxes. Yes, leases are a good tax deduction but an awful use of cash in that you are really just renting a car and never own anything. So which is more important to you – cash or tax deductions?
If you decide that leasing is what works best for you (and remember to discuss with your tax advisor!), then understand that :
- The Lease down payment is deducted over the period of the lease,
- There is an attributed “lease inclusion” amount which reduces your tax deduction. This applies to vehicles with a cost greater than $51,000. Each year, use this table to find your lease inclusion add back.
- To make it even more complicated, the lease payment and the lease inclusion must be adjusted for your business use percentage – again, something you need to discuss with your tax advisor and keep records to show business use.
And remember, whether you own or lease your vehicle, you CAN deduct your additional vehicle related expenses in your business under either the Standard Deduction or the Actual Expenses Method. I covered this in this Blog post
And for more Resources, go directly to my website.
Let’s keep more of your hard earned money by maximizing your business income tax deductions.