What credit card fees are tax deductible?
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.
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.
I am making the bold assumption that you are asking this as an individual, and not as a business owner. The short answer, as an individual, is none with the exception of the amounts that you may be charged when you use a debit or credit card to pay your taxes. That is the 2 or 3 percent fee imposed by the accepting agency for allowing that payment. In order to deduct it, you must itemize your return and it would be added to all of the miscellaneous expenses that are subject to a 2 percent threshold. This means that if your adjusted gross income is $50,000 and you have $1,050 dollars eligible miscellaneous expenses, you may get the tax benefit on $50.
You may not deduct annual fees, late charges, or interest paid if you are a consumer.
If you are a business, then you may be able to deduct these charges.
I work with both businesses and individual clients. Generally, credit card charges, interest, penalties, late charges, and transaction fees are not deductible for individuals. You may pay your income tax liability owed by credit card and that may incur a transaction fee which may be added to your tax preparation fees listed on your Schedule A. So in this case, if you itemize deductions on Schedule A, then you'll be able to write off this small portion of fees.
If you are a business owner, you will be able to write-off these credit card charges, fees, and interest.
You may want to consider starting a sole proprietorship and then you may be able to deduct business-related charges.