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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29577
Experience:  Taxes, Immigration, Labor Relations
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I leased trucks to my business. How do I report this income

Customer Question

I leased trucks to my business. How do I report this income in my personal tax return file?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Is that the truck which you own correct?

When we need to know how that business is organized ? is that LLC, corporation or solo proprietorship?

Another issue - if the truck is used 100% for business purposes?

And if you personally participate in that business activity?

Customer: replied 1 year ago.
Please,just answer the question about reporting my personal income from me leasing the trucks to the business.Yes,the trucks used 100 percent for a business
Customer: replied 1 year ago.
100%,Yes I participate. It is S corp
Expert:  Lev replied 1 year ago.

If your business is organized as separate legal entity - you will report income from leasing as rental income income on schedule E.

You will be able to deduct qualified expenses related to that property - interest on financing , property taxes, depreciation, etc.

However if you personally participate in that business activity - means it woudl be classified as self-rental - and your net rental income will be subject to self-employment tax.

Customer: replied 1 year ago.
is it cheaper to pay myself through W-2 for the lease in case of personal participation in this business activity?
Expert:  Lev replied 1 year ago.

That will not be any difference

- the corporation may pay you wages

- the corporation may reimburse you fro business related expenses

- of you may have self-rental if you wish.

Total tax liability will likely be very close.

Customer: replied 1 year ago.
thank you
Expert:  Lev replied 1 year ago.

S- corporation is your employer and your employer may provide you additional benefits including car allowances - that is OK.

However if such allowances are paid under an accountable reimbursement plan - they are not included into taxable income.In your situation - seems as your employer does not have an accountable plan and because of that - car allowances are reported as wages.

If you are using your car for business purposes - you are allowed to deduct car expenses.

Generally - you have a choice to use actual car expenses OR to calculate your car expenses base on the standard mileage rate.

Let me know if you need any help with reporting.