For those who are self-employed

[Linux23]

Basically if you own your own business, what are the criteria that determines you to use a vehicle you lease as a write off on your taxes?

How do you calculate the amount? How do you prove it to the IRS that the car is being used for 100% business? What are the advantages/disadvantages to this?

Any tips or any useful advice appreciated.

 

[CPA]

You are allowed to deduct the portion of the lease payment related to business use (plus other operating costs like gas, maintenance, registration, etc.). So, if you use the vehicle 90% of the time for business then you can deduct 90% of your lease.

There is, however, an "Inclusion" rule that forces you to include as revenue an amount that "equalizes" your deduction to those who use depreciation methods. There is an IRS Inclusion table that you will need to reference to determine the amount to include as income. It bases the inclusion amount by the year of the lease (1st, 2nd, etc.) and the amount of the lease.

Oh, and keeping a mileage book (you can pick up at Office Depot et al.) is the best way to evidence your usage.



edited for horrible grammar.

 

[Chrono]

what the hell did you just say again?

 

[Toastedlightly]

Originally posted by: Chrono
what the hell did you just say again?

 

[DAGTA]

CPA's post is a good one. Take the time to read it again.

In easier words: Keep a log of your miles driven for work purposes. Something like: 5/8/2005 40 miles for client A
Each year, figure out how many miles were driven for work and how many for personal reasons. Calculate the percentage. If 90% of the miles are work related, then you can deduct 90% of your total expenses for that vehicle.
I'm not familiar with the "Inclusion" rule.

 

[CPA]

Originally posted by: Chrono
what the hell did you just say again?

It's a tax thing, you wouldn't understand.

 

[tweakmm]

Originally posted by: CPA
You are allowed to deduct the portion of the lease payment related to business use (plus other operating costs like gas, maintenance, registration, etc.). So, if you use the vehicle 90% of the time for business then you can deduct 90% of your lease.

There is, however, an "Inclusion" rule that forces you to include as revenue an amount that "equalizes" your deduction to those who use depreciation methods. There is an IRS Inclusion table that you will need to reference to determine the amount to include as income. It bases the inclusion amount by the year of the lease (1st, 2nd, etc.) and the amount of the lease.

Oh, and keeping a mileage book (you can pick up at Office Depot et al.) is the best way to evidence your usage.



edited for horrible grammar.

Dear god man, are you some kind of accountant?

 

[Mo0o]

Time to call H&R block.

 

[EagleKeeper]

Common sense.

Treat it just as if you own the vehicle.
The lease cost is an expense.
Maintenance costs are expenses.

Get a small notebook and keep it in the glove box.
Record every time you use the vehicle for business and the mileage used.
Good to also put expenses in the same book.

The book will allow you to easily determine your expenses on the vehicle when tax time comes around.

Because the vehicle is leased, you can not depreciate it.
Also, the percentage that it is used for non-business is not able to be expensed.
This applies with respect to the lease costs and other fixed costs (insurance, etc.)
You may be able to get away with some maintenence costs in full, however, that could cause problems if ever audited. the amont that one saves by trying to pinch is not usually worth the aggrevation and potential trouble later down the line.

tweakmm
CPA is not just an accountant, he is also a certified paper pusher.:evil: