Hello. I have a question about car lease. I own an S corporation and I want to buy a new car, I am considering leasing because I think it would be better in my situation. As some people informed me, I can write off part or full lease payment from my final tax and in that case I pay for the car lease instead of paying tax so I basically drive for free because I would have to pay that amount for tax anyways. The other version is that I cannot write off the lease from final payable tax, I can only make auto expansions (the best way is putting it under mileage which is $0.55 per mile), so it is considered as any other business expenses which are subtracted from my income, so it saves me just some little % from payable tax. My accountant is that there is no such thing as the first option and it doesn't make any difference if I buy or lease a car. I am really confused. I hope you understand what is on my mind. Could you please clear it out for me?
USA Car lease write-off
- Thread starter magnumpl
- Start date
From what I understand, you are considering leasing or buying. Not sure I understand exactly what you are looking for but let me explain the tax treatment.
Lease - On your books, you would expense the lease payment sort of like if you were expensing a rental car. You can also expense the gas, insurance...etc. Can't take a mileage deduction. That would be double dipping.
Buy - You'd capitalize the purchase and depreciate the car over it's useful like unless it qualifies for a Section 179 deduction in which you can accelerate the deduction.
Bottom line, your accountant is right...the net effect will be the same.
People substitute the term write off for deduction...they mean the exact same thing...a reduction of your income. NOTE - That's not the same thing as a credit which is a dollar for dollar deduction of your taxes.
Lease - On your books, you would expense the lease payment sort of like if you were expensing a rental car. You can also expense the gas, insurance...etc. Can't take a mileage deduction. That would be double dipping.
Buy - You'd capitalize the purchase and depreciate the car over it's useful like unless it qualifies for a Section 179 deduction in which you can accelerate the deduction.
Bottom line, your accountant is right...the net effect will be the same.
People substitute the term write off for deduction...they mean the exact same thing...a reduction of your income. NOTE - That's not the same thing as a credit which is a dollar for dollar deduction of your taxes.