Can my wife claim her lease on her taxes??

Question

She is a hair stylist and uses her lease vehicle to travel to clients houses....she has a log of her travel. Is the actual lease payment able to be written off?

Answer 1

Yes, if she does not claim mileage she can claim actual costs if the vehicle is used strictly for business.

Answer 2

The entire lease payment cannot be written off. You have to reduce the payment by an "inclusion amount" which is a percentage of the fair market value of leased car times the percentage of business use.

If you don't want that complication, you may deduct 44.5 cents for each mile the leased car was driven for business purposes.

IRS Publication 463 has more details on deductions for business use of a leased car.

http://www.irs.gov/publications/p463/ch04.html#d0e5739

Answer 3

Auto expenses related to a business can be taken 2 ways. One is a standard mileage rate, meaning you add up all your business miles, multiply by the IRS rate (which is 44.5 cents for 2006), and take that as the auto deduction. The second option is to add up all your actual car expenses (fuel, repairs, lease pmts, etc) and pro-rate a portion to your business based on mileage. So if you drove 3000 miles for business and 10,000 miles total for the year, then you can take 0.3 (3000/10000) of your actual expenses as a deduction. But either way, you better have good substantiation, the IRS loves to audit these deductions since so many people cheat at them.

Answer 4

If she has another car for personal use, and the leased vehicle is used ONLY for business use, then she can. If she uses it for personal use also, she'd have to split the amount between personal and business travel and only deduct the business part.

Answer 5

ask a cpa. prolly though. cause you can right off gas. and my husband owns his company and writes off his company vehicles.