You often hear people talk about the tax benefits that are available to individuals who lease vehicles. Many people claim tax deductions or tax write-offs on their federal income taxes by leasing cars. Generally speaking, if you leased a car that is completely or even partly used for business purposes, you can significantly reduce your tax liability.
How Do You Figure Out Your Tax Deductions?
According to the IRS, there are two specific ways through which you can claim deductions on car expenses or more specifically, car leasing expenses. The first way is to use what is known as the standard mileage rate. With the standard mileage rate, your deductible expenses are calculated based on the number of miles your car was driven for business. The second way is by using actual expenses. Here, you determine tax deductions according to the amount that your car was used for business.
Here is what the IRS specifically mentions about car lease tax deductions:
“If you lease a car, truck, or van that you use in your business, you can use the standard mileage rate or actual expenses to figure your deductible expense. This section explains how to figure actual expenses for a leased car, truck, or van.
Deductible payments. If you choose to use actual expenses, you can deduct the part of each lease payment that is for the use of the vehicle in your business. You cannot deduct any part of a lease payment that is for personal use of the vehicle, such as commuting.”
Consult a Tax Advisor or an Accountant!
While the IRS does provide specific details as to how you can deduct car lease expenses on your taxes, this information can be complicated and obscure. If you would like to learn more about the tax benefits of car leasing, you should consult a reputable tax advisor or accountant.
More Information about Tax Benefits of Leasing a Car
If you would like to read more specific information about the tax benefits of leasing a car, visit the section of the IRS website that deals with business transportation expenses here.