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Is are credit card fees tax deductible for businesses a business expense?

TL;DR

Yes, credit card fees incurred for business transactions are generally deductible as a business expense. However, they must be directly related to business activities and properly documented.

Detailed Answer

Credit card fees, such as transaction fees or annual fees, are deductible when they are directly related to business expenses. For example, if a business owner uses a credit card to purchase office supplies or pay for services, the associated fees can be deducted. However, personal credit card fees or fees related to personal expenses are not deductible. It's important to separate personal and business expenses, ideally by using a dedicated business credit card. Additionally, if a credit card is used for both personal and business purposes, only the portion of fees attributable to business expenses is deductible.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors and single-member LLCs. For partnerships and corporations, it would be listed under 'Other Deductions' on the respective forms.

Real World Example

A freelance graphic designer uses a business credit card to purchase $500 worth of design software. The credit card charges a 3% transaction fee, totaling $15. The designer can deduct this $15 fee as a business expense on their Schedule C.

Audit Risk & Documentation Tips

The audit risk for deducting credit card fees is generally low if properly documented. Keep detailed records of all credit card statements, receipts, and invoices that clearly show the business purpose of the expenses. Ensure that personal and business expenses are clearly separated, ideally by using a dedicated business credit card.

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 15, 2025

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