Checkmark iconCan I Write This Off?

Can I deduct are credit card processing fees tax deductible?

TL;DR

Yes, credit card processing fees are generally tax deductible as a business expense.

Detailed Answer

Credit card processing fees can be deducted as a business expense if they are incurred in the course of running a business. This includes fees charged by credit card companies for processing customer payments. However, personal credit card fees are not deductible. For example, if a small business owner pays a 2% fee for each transaction processed through a credit card, these fees can be deducted from their business income.

Where to Put It on the Tax Form

Schedule C (Form 1040), Part II, Line 27a for sole proprietors or on the appropriate business tax return form for other entities.

Real World Example

A freelance graphic designer who charges clients via credit card incurs a 3% processing fee on each transaction. Over the year, these fees total $500, which the designer can deduct as a business expense on their Schedule C.

Calculation Required

A calculation is required for this deduction.

Calculate the total credit card processing fees by summing up all the fees charged by the credit card processor over the tax year.

Audit Risk & Documentation Tips

To minimize audit risk, keep detailed records of all credit card transactions and the associated fees. Maintain monthly statements from the credit card processor and ensure that these fees are clearly separated from personal expenses.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessRetailE-commerceFreelancers

Popular Related Pages

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

Back to Search