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Can I deduct are credit card fees tax deductible?

TL;DR

Credit card fees are generally deductible if they are incurred as ordinary and necessary expenses in the course of running a business. Personal credit card fees are not deductible.

Detailed Answer

Credit card fees, such as annual fees, late fees, or transaction fees, can be deducted if they are directly related to business expenses. For example, if you use a credit card to purchase supplies for your business, the associated fees can be deducted as a business expense. However, fees incurred on personal purchases are not deductible. It's important to distinguish between personal and business expenses, especially if you use the same credit card for both. Business credit card fees are considered a part of the cost of doing business and fall under ordinary and necessary expenses as per IRS guidelines.

Where to Put It on the Tax Form

Schedule C, Line 27a (Other Expenses) for sole proprietors or the relevant line for business expenses on corporate tax returns.

Real World Example

A freelance graphic designer uses a credit card to purchase design software and pays a $95 annual fee for the card. The $95 fee is deductible as a business expense because it is directly related to the operation of the business.

Audit Risk & Documentation Tips

Audit risk is moderate. Maintain clear records of all credit card statements and ensure that business and personal expenses are clearly separated. Keep receipts and documentation for all purchases made with the credit card to substantiate the business purpose of the fees.

IRS Reference

IRS Publication 535, Business Expenses.

Relevant Industries

FreelancersConsultantsSmall Business OwnersRetailers

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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 15, 2025

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