If you are looking for a car to use for business purposes, you might be interested in leasing. In fact, leasing can actually be a great option for this purpose. For one thing, payments can be lower, so you can reduce out-of-pocket business expenses. Additionally, leasing will allow you to drive a different, newer car every couple of years, so you can change vehicles as your business-related needs change, and you can ensure that you are always driving a modern, professional-looking vehicle.
One thing that you might be wondering about, however, is whether or not a car lease can be considered tax deductible. Luckily, the answer to this is “probably.” There are a few things that you’ll need to do in order to make this work, however.
Keep Track of Mileage
One very important thing that you have to do when leasing a car for business purposes is to keep track of the mileage. If you will be using the car for personal reasons at all, you’ll need to keep track of how many miles the car is used for personal reasons and how many miles the car is used for business reasons. Then, you can determine the percentage and use this for tax-related purposes. For example, if you use the car 60 percent of the time for business and 40 percent of the time for personal use, you may be able to deduct 60 percent of the cost of the vehicle on your taxes.
Determine How You Will File Your Deduction
There are a couple of different ways that you can file your lease as a tax deduction. The first option is to simply file for a deduction based off of your mileage. Then, you will be given a flat amount per mile. This can be a good option if you have not kept good records or if you want to make things easier for yourself at tax time.
The other option is to claim your actual expenses. This means that you will actually be deducting all of the money that you spent on the leased car, such as your lease payments. For some, this can be a way to file a bigger deduction, which can help with your taxes. However, it can also be more complicated and can require you to keep very precise records. If you are planning on filing your taxes this way, it is important to begin taking good cost records at the beginning of the year. Then, you won’t have to worry about missing out on any potential deductions.
Work With a Professional
The truth is that filling out your taxes can be complicated, especially if you are going to be taking deductions for the use of your leased car. To avoid making mistakes on your taxes and to help ensure that you get the full deduction that you are qualified for, it’s smart to work with a tax preparation professional who has a lot of experience. Then, if you happen to get audited, you will have some support with the situation as well.
If you are wondering if you will be able to claim your car lease as a tax deduction, the good news is that you might be able to. To get the best possible advice for your specific situation, however, it is a good idea to talk to a professional. Then, you can ensure that you are doing things the right way for your situation.