I am joining a new orthopaedic practice as an employee for the next two years and need a new car. Can I and is there any benefit to me asking the practice to lease a car and deduct the payments from my salary pre-tax? If they do can I still make deductions on my income taxes for mileage, etc?

When you're compensated as an employee, you're allowed to deduct your unreimbursed professional expenses as a miscellaneous itemized deduction - which are only deductible to the extent they exceed 2% of your income.

So if given the choice, you'd prefer that your group pay for your professional expenses, and then reduce your salary or your bonus by the amount of these expenses. By doing do, your professional expenses become 100% deductible to you.

The group shouldn't care, since they pay and deduct the same amount, whether they're paying your salary or your professional expenses.

Will your group pick up an automobile lease on your behalf before you become a partner? Probably not. Let's say that the group enters into a three year lease for a car, and you decide to leave the group before the lease runs its course. If that happens, the group will be stuck paying the remainder of the lease.

So you'll probably end up purchasing or leasing a vehicle on your own, and then deducting the business portion of the lease payments (or depreciation if you purchase the car), your insurance, repairs, and gas. As long as the total amount of your auto expenses, along with your other professional expenses and other miscellaneous itemized deductions, exceed 2% of your income, at least you'll get some tax benefit.

Zip Code: cpa@mdtaxes.com