Car lease tax deduction for business?

Question

My wife uses our leased car for her business. But the lease is only in my name. Can she still claim the car lease payment as a business expense?

Answer 1

As long a syou are filing Married/Joint then it is ok. Also remember the following:
The standard mileage rate may be used to figure the deductible costs of a vehicle that is owned or leased. If a taxpayer wishes to use the standard mileage rate for a leased vehicle, it must be used for the entire lease period. In other words, a taxpayer must use the standard mileage rate for the first year a vehicle is available for business use in order to use the standard mileage rate in subsequent years.

The standard mileage rate is adjusted annually by the IRS to reflect changes in the cost of operating a vehicle. In some situations it is adjusted during the year.

The standard mileage rate is used in place of actual expenses. Taxpayers who choose the standard mileage rate may not deduct actual expenses, such as depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance or vehicle registration fees. Business-related parking fees and tolls may be deducted in addition to the standard mileage rate. Fees for parking at a taxpayer’s main place of business or tolls related to commuting to and from that main place of business are personal expenses which are not deductible.

Answer 2

You may have a problem at audit. In order to deduct an expense, you must both be legally obligated to deduct it and make the payments. Since you have not leased the vehicle yourself, you are not legally obligated for the payments. Your relative would be a fool to do this, since he or she would be legally liable for any wear and tear on the vehicle. There would also be potential fraud issues if they didn't tell the leasing company that you were using the vehicle in the course of your business.

Answer 3

In addition to the good info that Country gives, remember that if it's not used only for business, but also for personal use, you have to keep good records on what mileage is which, and deduct expenses based on that, you wouldn't be able to just deduct the entire lease.