I can't tell you which is better, there are too many factors.
Car expenses are discussed in chapter 4 of publication 463.
https://www.irs.gov/forms-pubs/about-publication-463
Briefly, y...
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I can't tell you which is better, there are too many factors.
Car expenses are discussed in chapter 4 of publication 463.
https://www.irs.gov/forms-pubs/about-publication-463
Briefly, you can use the actual expense method or the standard mileage method. The standard mileage method assigns a standard cost per mile that includes allowances for fuel, maintenance, repairs, and depreciation. The only thing you can add to the standard mileage method is the cost of parking and tolls. If the vehicle is not used 100% for business, you need a mileage log showing the date, time and mileage for business trips.
Or you can use the actual expense method. You keep track of all your actual expenses, including fuel, repairs and maintenance and depreciation. You can include the lease payment; if you buy the car on a loan, you can include the interest but not the principal. If you buy the car outright, you just claim depreciation. (But, if the car cost is more than $70,000, you can only deduct a pro-rated portion of the lease payment, you can still deduct all the loan interest.). If you also use the car for personal use, you must keep a mileage log, and you must track the total vehicle miles for the year, and deduct a percentage of the total cost equal to the percentage that you drove the car for business.
The cheapest way to own a car for business is to buy it and drive it as long as you can, since the standard mileage rate gives you depreciation for as long as you own the car, even after normal depreciation would run out. But if you plan to trade in the car in 5 years or less, leasing is probably the better option. But I can't say that is guaranteed true in every case.
