Leasing a vehicle for my small business

[Culcat]

I drive a lot for my small business.  My vehicle has accumulated a lot of miles and I need a new vehicle.  Can I lease a vehicle for my small business and write it off on my taxes at the end of the year?

[carmen_t]

Hello and thank you for your question.  You will be able to deduct vehicle expenses for your self employed business.  You will have the option to chose standard mileage rate or actual expenses.  For standard mileage I recommend a mileage tracker app.  Quickbooks has a great one that conforms the mileage log to IRS standards.  Actual expenses you will maintain receipts to enter in those direct vehicle expenses (gas, insurance, repairs, loan interest, etc.)  There is a question in TurboTax if the vehicle is leased or not.  As mentioned before how these lease payments are accounted for depend if standard mileage rate is used or actual expenses.  I hope this answers your question.  I included a link below to a support article as well below.

Where to enter lease payments in TurboTax 

[Holly W]

Hello @Culcat 

Thank you so much for joining us today, we are so happy you are here!

I'm going to answer as if you are a sole proprietor, but also provide a link if otherwise.  

You can use the either the standard mileage or actual expenses method for a leased vehicle. However, if you use the standard mileage rate, you cannot switch to the actual expense method in a later year.

• • If you use the standard mileage rate for a leased vehicle, the lease payment amount is not deductible.
  • If you use the actual expenses method, leased vehicles are not depreciated. Instead, the business portion of the lease payment is deducted.
    
    

Here is the article in which this information was obtained:  TurboTax Business use of Vehicles.
Another link that may provide some more insight is the TurboTax Maximizing Tax Deductions for Business Use of Your Car. 

One thing to be mindful of is the mileage restrictions with the leasing company.  It may not affect your taxes if you go over your mileage, but something to be mindful of while considering leasing.

I hope this answers all of your questions and you have a wonderful rest of your day!

Cheers!

Holly W