Checkmark iconCan I Write This Off?

Is are credit card fees tax deductible for businesses a valid tax write-off?

TL;DR

Yes, credit card fees are generally tax-deductible for businesses as they are considered ordinary and necessary expenses incurred in the course of running a business. However, personal credit card fees are not deductible.

Detailed Answer

Credit card fees that a business incurs, such as processing fees for customer payments or annual fees for a business credit card, are deductible as business expenses. These fees must be directly related to the business's operations. For example, if a business accepts credit card payments from customers and incurs transaction fees, these are deductible. However, fees on personal credit cards used for personal expenses are not deductible. If a credit card is used for both personal and business expenses, only the portion of fees attributable to business use can be deducted. It's important to maintain clear records of business-related transactions to substantiate the deduction.

Where to Put It on the Tax Form

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

Real World Example

A freelance graphic designer uses a business credit card to purchase software and pay for online advertising. The credit card charges a 2% transaction fee on these purchases. At the end of the year, the designer can deduct these transaction fees as a business expense on their Schedule C.

Audit Risk & Documentation Tips

Audit risk for this deduction is generally low if proper documentation is maintained. Keep detailed records of all credit card statements, receipts for purchases, and any contracts or agreements related to the fees. Ensure that personal and business expenses are clearly separated, especially if using a credit card for both purposes.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersRetailersConsultantsE-commerceService Providers

Popular Related Pages

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

Back to Search