Are you always on the lookout for ways to maximize your tax deductions? We’ve all heard that interest charged by credit cards isn’t tax deductible, but what if I told you there’s an exception to this rule? In this post, we’ll explore whether or not credit card interest is deductible and, if so, which type of deduction can be taken and under what circumstances. Don’t let the tax (gov) take a chunk out of your taxes – it pays to know about every nook and cranny in the system!
Some credit cards can give you access to substantial rewards, sign up bonuses and a convenient way to pay, but may also bring along some unwanted fees.
If you’re an individual looking to deduct your credit card fees to boost your tax refund this year, you won’t have much luck — unfortunately, personal credit card use is almost never eligible for a deduction come tax season, but…..
Most credit card fees are deductible for businesses, however, so if you’re a small business using a business credit card you can likely deduct those fees on this year’s return.
Are credit card fees tax deductible for individuals?
Credit cards come with a variety of fees for their typical use, some are developed to penalize you and some have a membership fee. Some also have annual fees, foreign transaction fees, late fees, over-limit fees, balance transfer fees and other costs, it seems that the fees just never end! Unfortunately. for any travel, rewards, or cashback credit cards these fees won’t be tax deductible when using the card for personal use. On the other hand, many common credit card fees can be tax deductible if using it for a legitimate business expense. It’s illegal to deduct personal expenses from your business income, whether accidentally or otherwise, so you want to stay clear of trouble. As a general rule, you should keep personal expenses separate from your business expenses. You will not want business transactions crossing over into your personal transactions, so it’s best practice to keep the two apart.
Tax deducting credit interest legally would be a Smart Financial Goal.