Can I Write This Off?

Is are credit card processing fees tax deductible a business expense?

TL;DR

Yes, credit card processing fees are generally tax deductible as a business expense.

Detailed Answer

Credit card processing fees incurred by a business are considered ordinary and necessary expenses and can be deducted on a business's tax return. These fees are deductible in the year they are incurred, as long as they are directly related to the business operations. For example, a retail store that pays fees to a credit card company for processing customer payments can deduct these fees as a business expense. However, fees related to personal expenses or non-business activities are not deductible.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 27a for sole proprietors; or as a deduction on the appropriate business tax form for other entities.

Real World Example

A small online retailer pays $500 in credit card processing fees over the year. This amount is recorded as a business expense on their Schedule C, reducing their taxable income.

Audit Risk & Documentation Tips

Maintain records of all credit card processing statements and fees. Ensure that these fees are clearly separated from personal expenses. Keeping detailed records can help substantiate the deduction in the event 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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