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How do I deduct are credit card fees tax deductible on my taxes?

TL;DR

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

Detailed Answer

Credit card fees can be deducted if they are incurred as part of your business operations. This includes fees for processing customer payments, annual fees for business credit cards, and interest on business-related purchases. However, fees related to personal expenses are not deductible. For example, if you use a credit card to pay for office supplies, the associated fees are deductible. Conversely, if you use the same card for personal groceries, those fees are not deductible. It's important to distinguish between business and personal use, especially if using a card for both purposes. Keep detailed records to support the business nature of these expenses.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors or on the appropriate line for business expenses on other business tax forms.

Real World Example

A freelance graphic designer uses a business credit card to purchase design software and pays a $95 annual fee for the card. This fee is deductible as a business expense on Schedule C, Line 27a.

Audit Risk & Documentation Tips

Audit risk is moderate. To defend this deduction, keep detailed records of credit card statements, receipts for business purchases, and documentation showing the business purpose of the expenses. It's advisable to maintain a separate credit card for business expenses to simplify record-keeping and reduce audit risk.

IRS Reference

IRS Publication 535, Business Expenses.

Relevant Industries

FreelancersConsultantsRetailersService 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 25, 2025

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