Can I Get Tax Benefits for a Car Lease Under an LLC Structure?

So I've been looking into this and I'm pretty confused... I've heard (and from what I've researched online, it seems legitimate) that I can form an LLC and then have that LLC lease a vehicle using my own money since I'd be the sole proprietor. What I'm thinking is that to maximize the tax write-offs and depreciation, I could put a business phone number on the car. This way it could be considered as being used for business purposes 100% of the time, allowing me to get the maximum tax benefits possible. But this feels almost too good to be true? Am I overlooking something important here? Has anyone done this successfully or know the actual IRS rules about this approach?

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18 comments

StarStrider

•8M

This is a common question but there are some important distinctions to make. While you can form an LLC and lease a vehicle through it, the tax treatment isn't as straightforward as you might hope. Simply putting a business phone number on a car doesn't make it 100% business use in the eyes of the IRS. You'll need to keep a mileage log documenting business vs. personal use. The IRS is very strict about this distinction. If you're a single-member LLC, you're typically treated as a sole proprietorship for tax purposes (unless you elect otherwise), so the LLC doesn't provide additional tax benefits for the vehicle by itself. The tax write-offs are based on actual business use percentage, not ownership structure. Also, there are luxury auto depreciation limits that cap how much you can deduct each year, regardless of business use percentage. For 2025, these limits are quite restrictive for higher-end vehicles.

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StarStrider

•8M

If your LLC genuinely only conducts business activities and the vehicle is exclusively used for those business purposes, then yes, the lease payments could potentially be business expenses. However, the IRS looks at substance over form. If you're using the vehicle for personal errands, commuting, or other personal activities, you need to track and allocate accordingly. Regarding fringe benefits, if you're a single-member LLC taxed as a sole proprietorship, you and the business are considered the same taxpayer entity, so providing yourself with a vehicle isn't considered a fringe benefit. If you elect to be taxed as an S-Corp or C-Corp, different rules apply, and there could be implications for personal use being treated as compensation.

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Carmen Ruiz

•8M

After spending thousands on accountants who kept giving me conflicting advice about my business vehicle, I finally found taxr.ai at https://taxr.ai and it was seriously a game-changer for my situation. I uploaded my LLC documents and explained my vehicle situation, and their system analyzed everything and gave me clear guidance on exactly how to structure my vehicle lease to maximize legitimate deductions while staying compliant. What impressed me most was how they highlighted specific sections of tax code that applied to my situation rather than just generic advice. They even helped me understand what documentation I needed to maintain to support my claimed business use percentage.

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Carmen Ruiz

•8M

They actually provide a digital mileage tracking template that integrates with their platform. It's much easier than the paper log I was trying to keep before. You can categorize trips and it calculates your business use percentage automatically which is helpful for quarterly estimates. Regarding CPAs, I still use mine, but taxr.ai provided specific documentation analysis that my CPA didn't have time to do. My CPA actually appreciated the detailed analysis as it helped him finalize my return more accurately. It's not a replacement for a CPA but more like a specialized tool for complex situations like business vehicle deductions, entity structuring, and documentation review.

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Zoe Alexopoulos

•8M

I was initially skeptical about taxr.ai when I saw it mentioned here, but I decided to try it for my LLC vehicle situation. Honestly, it was eye-opening. The system flagged that my approach would have triggered audit red flags because I wasn't maintaining proper documentation for business vs. personal use. They provided a customized analysis showing exactly how to properly structure my vehicle deductions based on actual tax court cases. Most importantly, they showed me how to implement a compliant record-keeping system that would stand up to IRS scrutiny. My actual tax savings were about $4,300 more than what I would have claimed with my original approach, and I now have proper documentation to support everything.

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Jamal Anderson

•8M

After months of trying to get through to the IRS about my LLC vehicle question (seriously called like 15 times), I finally found Claimyr at https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c. It was exactly what I needed! They got me connected to an actual IRS agent who gave me the official guidance on my vehicle lease situation. The agent confirmed that for my LLC taxed as an S-corp, I needed to track personal use as a fringe benefit on my W-2, but could deduct the business portion. Got the whole thing resolved in one call instead of weeks of frustration.

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Jamal Anderson

•8M

It actually uses a system that continually redials the IRS for you until it gets through, then calls you and connects you directly to the agent. It's all explained in their demo video - it's basically like having someone sit there and redial for hours so you don't have to. No magic, just automation that saves you from the redial hell. They don't access any of your tax info - they just connect the call. I was connected within about 40 minutes, which still saved me days of trying myself.

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QuantumQuasar

•8M

I have to admit I was dead wrong about Claimyr. After posting that skeptical comment, I was desperate enough to try it when I couldn't resolve my LLC vehicle lease question with my accountant. I thought it was going to be a waste of time, but they actually got me connected to an IRS business tax specialist in about 35 minutes. The IRS agent explained exactly how the LLC lease arrangement works from a tax perspective and what documentation I needed to maintain. She even emailed me the relevant publication sections afterward. Saved me literally weeks of uncertainty and probably thousands in potential improper deductions. Sometimes it's worth admitting when you're wrong - this service actually delivered exactly what it promised.

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Liam McGuire

•8M

One approach I've seen work well is electing to have your LLC taxed as an S-Corporation instead of a sole proprietorship. This creates a separate tax entity where you can implement an accountable plan for vehicle reimbursement that can be more advantageous than the straight mileage deduction. The key is proper documentation and separation between business and personal use. No matter what approach you take, you NEED to keep detailed mileage logs. The IRS routinely disallows vehicle deductions during audits because of poor record keeping.

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Liam McGuire

•8M

An accountable plan is an arrangement that allows your business to reimburse you for business expenses without those reimbursements being counted as taxable income to you. For it to qualify, you need three key elements: a business connection for the expense, adequate accounting within a reasonable time period, and returning excess reimbursements. For vehicles specifically, you can set up a plan where your S-Corp reimburses you at the standard IRS mileage rate for documented business miles. This creates a deductible business expense for the company while providing you tax-free reimbursement. It's often more advantageous than trying to deduct lease payments directly, especially for mixed-use vehicles.

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