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

TL;DR

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 as part of operating 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 run a retail store and pay a percentage of each transaction to a credit card processor, those fees are deductible. Conversely, if you pay a credit card processing fee for personal purchases, it is not deductible.

Where to Put It on the Tax Form

Report this deduction on Schedule C (Form 1040) under 'Other Expenses' or as part of 'Cost of Goods Sold' if applicable.

Real World Example

A small e-commerce business pays $1,000 in credit card processing fees over the year. This amount is reported as a business expense on Schedule C, reducing the business's taxable income.

Calculation Required

A calculation is required for this deduction.

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

Audit Risk & Documentation Tips

Maintain detailed records of all credit card processing fees, including monthly statements and invoices from the processing company. Ensure that these fees are clearly associated with business transactions to substantiate the deduction in case of an audit.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

Small BusinessRetailE-commerceFreelancers

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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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