Company car leasing can be a wise business decision for both large corporations and for small businesses. One of the most essential reasons is that when dealing with a lease, tax deductions are abundant. Company car leasing can allow a small business owner to obtain a variety of lease tax write offs.
If a business owner logs all the times spent in the leased company car, with particular attention paid to the miles driven, the IRS will allow the small company car leasing discounts that can be written off using either the standard rate, which is determined annually by the Internal Revenue Service, or by deducting the actual cost of the miles.
In order for a lease tax deduction to be filed based on the actual cost of the miles, the person preparing the company’s taxes will have to determine the business miles driven, and then divide this number by the total miles. This figure must then be multiplied by the total cost of the company car leasing cost. This process can also be performed to determine the proper lease tax write off associated with the lease payments themselves.
Although it is not limited to companies utilizing a company car leasing plan, maintenance, car insurance, and gas may be tax deductible, depending on the percentage of the car’s usage that is devoted to business practices. Therefore, it is important to keep accurate car records.