How to Report IRS Credit Card Expenses

You must use IRS Form 1040 to itemize your tax deductions.

The Internal Revenue Service accepts credit card payments for income taxes due. However, the IRS will not pay any transaction fees, typically paid by the merchant, so, the credit card company charges a convenience fee to the credit card user. This credit card expense can be deducted from your income taxes as a miscellaneous deduction, which means you must forgo the standard deduction in order to claim it. Therefore, you should only claim the deduction if the total of your itemized deductions exceeds the value of your standard deduction.

Things You'll Need

• Schedule A

Instructions

1. Keep a receipt that shows how much you paid to pay your taxes online with a credit card. You will need to reference this amount when doing your taxes and if the IRS audits your tax return.

2. File your taxes the following year using form 1040 and itemize your deductions using Schedule A. For example, if you paid $50 to pay your 2009 income taxes with a credit card in 2010, you would claim the deduction on your 2010 tax return.

3. Report the amount of the deduction as a miscellaneous tax deduction on Schedule A. The amount will be added to your other miscellaneous deductions, and the amount by which the total exceeds two percent of your adjusted gross income, will be used to decrease your taxable income.

References

• IRS: Pay Taxes by Credit or Debit Card
• IRS: Publication 529
• IRS: Schedule A Instructions

Resources

• IRS: Form 1040
• IRS: Schedule A