Can I Write This Off?

Can I write off credit card processing fees?

TL;DR

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

Detailed Answer

Credit card processing fees can be deducted as a business expense if they are incurred in the process of running a business. This includes fees charged by credit card companies for processing customer payments. However, these fees are not deductible for personal expenses. For example, if you own a retail store and pay a percentage of each sale to a credit card processor, this fee is deductible. Conversely, if you incur a processing fee on a personal purchase, it is not deductible.

Where to Put It on the Tax Form

Schedule C (Form 1040), Part II, Line 27a for sole proprietors. For corporations, it would be on Form 1120, Line 26.

Real World Example

A small e-commerce business owner pays $500 in credit card processing fees over the year. This amount is recorded as a business expense on their Schedule C, reducing their taxable income by $500.

Calculation Required

A calculation is required for this deduction.

Add up all the credit card processing fees incurred during the tax year to determine the total deductible amount.

Audit Risk & Documentation Tips

Keep detailed records of all credit card processing fees, including monthly statements from the credit card processor. Ensure these fees are clearly separated from personal expenses to avoid issues during an audit.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessRetailE-commerceFreelancers

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 7, 2025

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