Business Interest Expense

DEFINITION of 'Business Interest Expense'

The cost of interest that is charged on business loans used to operate the business. Business interest is deductible as an ordinary business expense. The loan must be used to either purchase assets for the business or pay for business expenses. If any amount of the loan is used for nonbusiness purposes, then the amount of deductible interest from the loan must be reduced proportionately.

BREAKING DOWN 'Business Interest Expense'

Business expenses must be deducted on the proper tax form that correlates to the business for which the expenditure was made. Taxpayers who incur corporate business expenses cannot deduct this expense on their personal returns. The business must reimburse the taxpayer and then deduct the reimbursement on the corporate return.

RELATED TERMS
  1. IRS Publication 535 - Business ...

    A document published by the Internal Revenue Service (IRS) that ...
  2. Interest Deduction

    A deduction for taxpayers who pay certain types of interest. ...
  3. Business Expenses

    Any expenses incurred in the ordinary course of business. Business ...
  4. Form 2106: Employee Business Expenses

    A tax form distributed by the Internal Revenue Service (IRS) ...
  5. Investment Interest Expense

    Any amount of interest that is paid on loan proceeds used to ...
  6. Deductible

    1. The amount you have to pay out-of-pocket for expenses before ...
Related Articles
  1. Personal Finance

    Writing Off the Expenses of Starting Your Own Business

    Learn how to navigate the complicated rules for writing off the expenses of starting your own business. It could save you a lot of money.
  2. Retirement

    10 Tax Benefits For The Self-Employed

    Running your own business has both personal and financial perks.
  3. Personal Finance

    An Overview Of Itemized Deductions

    Not taking the standard deduction this year could save you hundreds of dollars.
  4. Financial Advisor

    Increase Your Tax Refund With Above-The-Line Deductions

    Find out about these deductions and how you can use them to lower your tax bill.
  5. Markets

    Calculating Interest Expense

    Interest expense is the cost of borrowing money.
  6. Financial Advisor

    Top Tax Tips to Deduct Investment Management Fees

    Investment expenses can be deducted by those who meet three main criteria. Here's what they are and how they work.
  7. Personal Finance

    What's a Deductible?

    With insurance, a deductible is the amount of money the insured pays out-of-pocket before the insurance company pays for the loss.
  8. Markets

    Getting Government Loans For Your Small Business

    Would a government loan provide a more cost-effective way to finance your business? See whether your company qualifies for a government loan.
  9. Entrepreneurship & Small Business

    Top Tax Deductions For Brokers

    If you are paying out of pocket, you can make your business expenses work for you at tax time.
  10. Personal Finance

    Steps to Qualify For a Small Business Loan

    Learn steps to qualify for a small business loan such as identifying financing needs, preparing a business plan and getting required documents.
RELATED FAQS
  1. Are personal loans tax deductible?

    Find out whether interest on personal loans is tax deductible and what types of loan interest can be used to reduce your ... Read Answer >>
  2. What are the most common business deductions and expenses for small businesses?

    Learn about some of the most common business tax deductions available to small businesses that can reduce net business expenses. Read Answer >>
  3. What are the most common operating expenses for an online business?

    Learn about the common expenses of online businesses and find out about some of the tax implications of new business expenses ... Read Answer >>
  4. How is the deductible I paid for my insurance claim treated for tax purposes?

    Find out how your health insurance deductible is treated for tax purposes and under what conditions you may be able to deduct ... Read Answer >>
  5. In what instances does overhead qualify for certain tax allowances?

    Find out about instances in which overhead expenses qualify for tax allowances, including some common examples of tax-deductible ... Read Answer >>
  6. Can you write variable costs off your taxes?

    Learn if you can deduct variable or fixed costs from your business taxes and learn more about business deductions, cost of ... Read Answer >>
Hot Definitions
  1. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  2. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  3. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  4. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  5. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  6. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
Trading Center