How to Deduct a Leased Car
- 1). Keep a notebook in your car to track the mileage used for business purposes. This is very important in determining your allowable deduction.
- 2). Calculate the percentage of business mileage driven on your car. Add the totals of personal and business miles driven and then divide the sum by the total business miles to find your business-use percentage.
- 3). Add your lease payments for the car. Figure the amount of your total lease payments that relates to your business use of the vehicle. For example, if your lease payments totaled $5,000 for the year and 50 percent of your vehicle use was for business, $2,500 of your lease payments would be business related since $5,000 x 0.05 = $2,500.
- 4). Subtract the appropriate inclusion amount from your business-related lease payments if you leased the car for more than 30 days. You can find the inclusion amount for your car in Internal Revenue Service Publication 463. This is the amount that you can deduct for your leased car.
- 5). Enter the amount of your deduction on Schedule A, Line 21 if you drove your car as an employee. Enter your deduction on Schedule C, Line 9 if you are self-employed.
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