leasing question - Tax... ?

[BM Computer Src]

If you Lease a new car for use in business, I know you can deduct the payments off your taxes. My question is, can you deduct the lease payments, as well as mileage deduction?

(Can you do both, or just one or the other?)


Thanks

Bob

 

[GNSCOTT]

Not sure about milage, but i'm pretty sure you could write off gas and service.

 

[Buick From Hell]

You can deduct both---

You have to indicate what percentage the vehicle is used for work vs for personal use. Whatever your "work" percentage is, that's how much of the lease payments AND mileage deduction you can take.

You can also deduct the same percentage of fuel and any repairs or maintenance.

couple of notes--if your state has sales taxes, part of your lease payment will be state sales tax, so be sure NOT to include that portion of your lease payment! The sales tax IS deductible, just not as part of the lease payment...

another thing is the "vehicle lease inclusion"--this is where the IRS gets some money back...hard to explain, but it's a formula of the difference between fair market value of the lease vehicle and what the IRS considers "reasonable"--meaing you WON'T be able to claim all of the lease payments on your Ferrari! ---the typical inclusion on our truck is less than $100 (which gets added back as "income") so it's not bad...