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I leased trucks to my business. How do I report this income

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in my personal tax return...
I leased trucks to my business. How do I report this income in my personal tax return file?
Submitted: 1 year ago.Category: Tax
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3/11/2016
Tax Professional: Lev, Tax Advisor replied 1 year ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,722
Experience: Taxes, Immigration, Labor Relations
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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?

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Customer reply 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 reply replied 1 year ago
100%,Yes I participate. It is S corp
Tax Professional: Lev, Tax Advisor 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.

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Customer reply 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?
Tax Professional: Lev, Tax Advisor 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.

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Customer reply replied 1 year ago
thank you
Tax Professional: Lev, Tax Advisor 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.

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