How to Lease Equipment for Tax Deductions

Deducting the cost to lease heavy equipment will reduce your tax liability.

A thorough understanding of tax deductions is essential when operating any business. Claiming all possible deductions available to you could mean the difference between owing hundreds to the IRS versus receiving a refund or getting a larger refund. Overlooked tax deductions are one of the most common and costly mistakes made on tax returns, according to the Internal Revenue Service (IRS). The cost of leasing equipment for business is one often overlooked deduction. Start saving money today with better expense management skills.

Things You'll Need

• Ledger notebook
• Small box

Instructions

1. Sign a lease agreement when leasing equipment and keep a copy in your records. It is very important to remember that you must use the equipment solely for business purposes. For example, leasing a car to drive to a ski resort while on a Colorado business trip is not a qualifying expense. Leasing a cement truck to finish a project your construction company has been working on is a qualifying deduction.

2. Write down each payment you make for equipment leasing in a ledger book. Be specific in your entries so your record will be easier to read at tax time. Include the type of equipment leased, the date and amount paid.

3. Ask for receipts for all your payments and organize in a small box in date order. This may seem tedious, but is well worth it when later seeking a specific receipt.

4. Take the ledger book and receipts to your accountant or tax preparer, who will determine the appropriate amount of your deduction based upon the information you provide. If you prepare your own tax return, use the information you have gathered when completing Schedule C.

References

• Lease Advisor: Leasing Basics