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Can freelancers deduct can you claim credit card fees on taxes?

TL;DR

Freelancers can generally deduct credit card fees as a business expense if they are directly related to business transactions. Personal credit card fees are not deductible.

Detailed Answer

Credit card fees incurred in the course of conducting business, such as processing fees for client payments or annual fees for a business credit card, are deductible. These fees must be ordinary and necessary expenses for your business. For example, if you use a credit card to purchase supplies or pay for advertising, the associated fees are deductible. However, fees from personal transactions or personal credit cards are not deductible. It's crucial to differentiate between personal and business expenses and maintain clear records.

Where to Put It on the Tax Form

Schedule C, Line 27a (Other Expenses)

Real World Example

A freelance graphic designer uses a business credit card to purchase $2,000 worth of design software. The credit card charges a 3% processing fee, totaling $60. This $60 fee is deductible as a business expense on Schedule C.

Audit Risk & Documentation Tips

The audit risk for this deduction is moderate. To substantiate the deduction, keep detailed records of all credit card statements, receipts, and invoices that show the business purpose of each transaction. It's also advisable to maintain a separate credit card for business expenses to avoid mixing personal and business transactions.

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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