What Is the Tax Write Off for Renting a Car for Your Business?
If you rent a car for business use, when you file your taxes you may deduct costs associated with lease and operation of the vehicle. According to Internal Revenue Service guidelines, you can claim several deductions.
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Deduction eligibility
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If you only use the rented car for business purposes, you may take 100% of the eligible deductions discussed below. If you also use the vehicle for personal use, you may only deduct the portion of the costs associated with its business use.
Deducting lease payments
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You may deduct all lease payments for a car that you rent entirely for business use. If you also use the car for personal purposes, you can only deduct a portion of the lease payments. For instance, if you use the car 50% for personal purposes, you may only deduct 50% of the lease payments.
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Deducting standard expenses
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For each mile you drive the car for business purposes, you may choose to deduct expenses at a standard rate for your vehicle that estimates the cost of operation. As of July 2010, the standard mileage rate is 55 cents a mile.
Deducting actual expenses
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As an alternative, you may also deduct the actual expenses associated with the cost of operating your business vehicle. You may write off the costs of gas, oil, repairs, tires, license and registration and that were associated with business use.
Deducting depreciation expenses
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You may not write off the depreciation of a car rented for a business. Such deductions are only available for cars you purchase for business purposes.
Warning
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The IRS requires you to keep accurate records pertaining to any vehicle you rent and use for business purposes, so be sure to keep all maintenance and use records up to date.
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References
- Photo Credit yellow car, a honda japanese sport car model image by alma_sacra from Fotolia.com
