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Can you write off are credit card fees tax deductible for businesses?

TL;DR

Yes, credit card fees incurred for business transactions are generally tax deductible as ordinary and necessary business expenses. However, personal credit card fees are not deductible.

Detailed Answer

Credit card fees, such as processing fees or annual fees, are deductible when they are directly related to business activities. For example, if a business pays a fee for processing customer payments via credit card, this fee is deductible. However, fees related to personal purchases or personal credit cards are not deductible. It's important to distinguish between personal and business expenses and ensure that only business-related fees are claimed. Additionally, if a credit card is used for both personal and business expenses, only the portion of fees attributable to business use can be deducted.

Where to Put It on the Tax Form

Schedule C, Line 27a (Other expenses) for sole proprietors. For partnerships and corporations, it would be included in the general deductions section on Form 1065 or Form 1120.

Real World Example

A freelance graphic designer who uses a business credit card to purchase design software and pays a 3% processing fee on each transaction can deduct these fees. If the designer spends $1,000 on software, the $30 processing fee is deductible.

Audit Risk & Documentation Tips

Audit risk is moderate. Maintain clear records of all credit card statements and receipts that show the business purpose of each transaction. It's advisable to keep a log of business expenses and ensure that personal and business expenses are clearly separated. If using a credit card for both personal and business expenses, document the business-use percentage and apply it consistently.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersRetail BusinessesConsultantsE-commerceService Providers

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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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