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Can freelancers deduct are credit card fees tax deductible for businesses?

TL;DR

Yes, credit card fees are generally deductible for businesses, including freelancers, as they are considered ordinary and necessary expenses incurred in the course of business operations.

Detailed Answer

Credit card fees are deductible when they are directly related to business transactions. For example, if a freelancer uses a credit card to purchase supplies or pay for services necessary for their business, the associated fees (such as annual fees, late fees, or transaction fees) can be deducted. However, personal credit card fees are not deductible. It's important to distinguish between personal and business expenses, especially if a credit card is used for both. In cases where a card is used for mixed purposes, only the portion of fees that relate to business expenses is deductible. This requires careful record-keeping to ensure that only business-related fees are claimed.

Where to Put It on the Tax Form

Schedule C, Line 27a (Other Expenses) for sole proprietors and freelancers.

Real World Example

A freelance graphic designer uses a credit card to purchase design software and pays a $50 annual fee for the card. The designer can deduct the $50 fee as a business expense on their Schedule C, as it is directly related to their business operations.

Audit Risk & Documentation Tips

Audit risk is moderate. It's crucial to maintain detailed records, including credit card statements and receipts, to substantiate that the fees are business-related. Keep a log of business expenses paid with the credit card and ensure personal expenses are not mixed with business deductions. Consider using a separate credit card for business expenses to simplify record-keeping.

IRS Reference

IRS Publication 535, Business Expenses.

Relevant Industries

FreelancersConsultantsSmall Business OwnersIndependent Contractors

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 25, 2025

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