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Is can you claim credit card fees on taxes a valid tax write-off?

TL;DR

Credit card fees can be deductible as a business expense if they are incurred in the course of operating a business. Personal credit card fees are not deductible.

Detailed Answer

Credit card fees, such as annual fees or transaction fees, are deductible if they are directly related to business expenses. For example, if you use a credit card to purchase supplies for your business, the transaction fee can be deducted as a business expense. However, fees related to personal purchases are not deductible. It's important to separate business and personal expenses and maintain clear records. If a credit card is used for both personal and business expenses, only the portion of the fees related to business use is deductible.

Where to Put It on the Tax Form

Schedule C, Line 27a for sole proprietors. For other entities, it may appear on the general deductions line of the applicable business tax return form.

Real World Example

A freelance graphic designer uses a credit card to purchase $500 worth of design software. The credit card charges a 2% transaction fee, which is $10. The designer can deduct this $10 fee as a business expense on their Schedule C.

Audit Risk & Documentation Tips

The audit risk for this deduction is moderate. To defend this deduction, keep detailed records of all credit card statements, receipts, and invoices showing the business purpose of each transaction. Clearly separate personal and business expenses and maintain a log if a credit card is used for both purposes.

IRS Reference

IRS Publication 535, Business Expenses.

Relevant Industries

FreelancersConsultantsSmall Business OwnersRetailers

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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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