Most of us have financial problems and those who have a business have an entire different set of other difficulties that they have to handle. There are a couple of things that you can do for your business in order to lower your expenses. One of the most common ones would be to write off a percentage of the monthly payments you make for a car as a tax deduction. A car lease deduction can provide serious savings for your company so you should give it a go.
If you have decided to do so, you’ll first have to track the amount of time that you use the car for business purposes by writing in a log. Activities like going to business appointments, running errands for business purposes as well as other similar duties must be written in that log. You will have to express the amount of time as a percentage of the total time you use the vehicle.
The next step would be to figure out how much money you have paid for the car lease over a period of 12 months and what you get will be the total amount of your monthly payments. After that, you have to deduct the aforementioned business-use percentage of the lease payments from your income taxes. To give you an example, if the car is used 50% of the time for business purposes, you will be able to add half of the payments that you’ve made for the leas as a tax deduction.
Don’t forget to add up additional related expenses, like insurance, gas, repairs and maintenance. In a similar way, the same percentage of these costs can be deducted.
Lastly, you will have to factor in the so-called “lease inclusion amount”. Vehicles that cost over a certain price tag are subject to a specific fee that diminishes the amount of deductible lease expense. To figure out how you can calculate this and more details about tax deductions related to this subject you’ll have to check out the IRS publication #463.
If you are uncertain regarding how much you can write off, it is advisable that you contact an accountant. These deductions will do wonders if you have a car for which you pay high monthly premiums. Even when you buy the car you are eligible for some tax deductions so talk to a professional that can guide you towards the right direction.