A leased vehicle belongs on Line 20a, rent or lease of vehicles, machinery and equipment.
Why line 20a
Lease payments on a car or van used for business go on line 20a, the vehicle half of line 20, while fuel, insurance and repairs go on line 9. You only get the lease deduction if you use the actual expense method: the standard mileage rate replaces all of it, lease payments included, with cents per business mile. Deduct only the business-use percentage of each payment, and on an expensive vehicle leased for 30 days or more, reduce the deduction by the lease inclusion amount from the IRS tables.
On the printed form this is line 20a. Line 20 is the total of 20a and 20b, so a worksheet that reports one line 20 figure is adding the two together.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a leased vehicle lands on Line 20a without you sorting it.
Start for freeWhat a leased vehicle is confused with
- Line 9, car and truck expenses
- Line 20a takes the lease payments, while fuel, insurance, repairs and anything claimed under the standard mileage rate belong on line 9 car and truck expenses.
- Form 4562, form 4562, carried to schedule c line 13
- If the agreement is a conditional sales contract rather than a lease you own the vehicle, so you depreciate it on Form 4562 and deduct interest instead of reporting rent.
- not deductible, not deductible
- Commuting miles are personal, so the share of the lease covering the drive between home and a regular workplace is not deductible at all.
Examples that belong on line 20a
- $389 a month on a leased van used only for the business
- $310 a month at 70% business use, so $217 a month reaches line 20a
- $4,668 of annual lease payments reduced by the lease inclusion amount on a luxury car
- $0 on line 20a for a leased car where the owner claimed the standard mileage rate instead
What does not belong here
- Lease payments in a year you are claiming the standard mileage rate.
- The personal and commuting share of the payments.
- Fuel, insurance and maintenance, which belong on line 9.
- A down payment or capitalised cost reduction deducted in full in year one rather than spread over the lease term.
The limit that applies
On a lease of 30 days or more for a vehicle above the fair market value threshold in the IRS tables, an inclusion amount reduces the deduction. The business-use percentage applies to the payments, and lease payments cannot be combined with the standard mileage rate.
What to keep
Keep the lease agreement, the monthly statements, and a mileage log separating business from personal miles. The log is what supports the business-use percentage applied to every payment.
Other expenses on line 20a
| Expense | Line |
|---|---|
| a leased copier or printer | Schedule C, Line 20a |
| a leased trailer | Schedule C, Line 20a |
| a rented dedicated server | Schedule C, Line 20a |
| car lease payments | Schedule C, Line 20a |
| equipment and tool rental | Schedule C, Line 20a |
Related lookups
- Where does business mileage go on Schedule C?
- Where does a website build go on Schedule C?
- Is a car payment deductible on Schedule C?
Sources
- Instructions for Schedule C (Form 1040)
- Publication 463, Travel, Gift, and Car Expenses
- Tax Topic 510, Business Use of Car
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so a leased vehicle lands on Line 20a without you sorting it.
Start for free