What credit card fees are tax deductible?

Tax Deductions / Credits
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July 2018

Both individuals and businesses can take advantage of certain tax rules to deduct fees that are incurred through various credit card transactions. For example, you can deduct credit and debit card fees incurred if you paid your individual federal income taxes electronically. Another deduction is available if a credit card company imposes fees on your business for the service of processing charged sales. If you have a business credit card, you also qualify for deductions based on annual fees and late fees charged by your provider.

Deductions for Individuals and Businesses

The Internal Revenue Service, or IRS, offers electronic payment systems for tax purposes, but other federal laws prohibit the IRS from directly paying any of the fees associated with debit or credit transactions. The IRS created a deduction in 2009 to offset the fee assessed by your credit card company when you make electronic tax payments. This is an expense that can be included in your miscellaneous itemized deductions on Schedule A (IRS Form 1040 or Form 1040NR), some of which can be claimed if all together they exceed 2% of your adjusted gross income (AGI). IRS Publication 529 includes the full details on expenses that are subject to this 2% threshold, and those that are not.

When your business accepts purchases through a charged credit card, the processing company imposes a fee for every swipe. The IRS lets you deduct those fees from your business taxes. If you have a business credit card and use it for business-related purchases, you can qualify for several different deductions. For one, all interest paid on the card is fully deductible. If you are assessed an annual fee, late charges or a host of other fees, those are also fully deductible. These same privileges do not extend to individual credit cards.

January 2017
January 2017