However here’s a possible exception for claiming credit card interest on taxes but check with a tax professional to find out for sure:
Qualified business expenses?
Do you work for yourself? Do you own a small company? If you have made interest payments on qualified business purchases made with a credit card, then you might be able to deduct the interest for those – check with a tax professional or your small business tax software for the answer.
However when credit card interest is tax deductible, one of the pickles that many small business owners find themselves in is that they commingled their finances by using a single credit card for both personal and business purchases. If that is done, how on earth are you going to be able to calculate the interest that corresponded to your business expenses? Remember, if you don’t pay your balance in full each month the credit card interest begins accruing from the date of each purchase, which would make finding the answer even more perplexing. Then of course, minimum payments would have to be factored in somehow (and I don’t even know how you that would be done).
In short, if you are mixing personal and business expenses on a single credit card, unfortunately I think it might be next to impossible to write off the interest from the business expenses (unless your accountant knows how to do it). I personally would never try to deduct the interest if I commingled, because how on earth would I defend my calculations in an audit? I wouldn’t be able to! And, in my opinion, it’s better to be safe than sorry when it comes to taxes!
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Is the interest I pay on my Care Credit Card tax deductible? It is only used for health/dental/pet issues. They do offer interest free if payed off within so many months, but if you don’t you start paying interest and have to pay all the interest from the past months too. I have used this for my pets surgery two years ago and am still paying.
We are actually being double taxed. We pay income tax on money to pay CC interest. Then the banks pay tax again on the same CC interest. The tax code is supposed to be set up to tax only one time. Somehow everyone has forgotten this premise. Int = Prin X rate X time. The government doesn’t have a dog in the CC interest business so they don’t really care if it is usury. Really 18%. They do care about T bills @ 4%.I say make CC interest tax deductible and the economy will take off. Lower CC interest = more money to spend / invest.
I’m glad they got rid of this deduction. Up until 1986, the IRS was actually encouraging people to spend irresponsibly on credit cards instead of paying off debts in a timely manner. No wonder why we have $16T in national debt.On a side note, the mortgage interest deduction has at least partially caused all of the crazy booms and crashes in the housing market. How many people were willing to borrow an extra $100K knowing that they could get a significant amount of that money back as a tax credit?
Reagan was such a freaking liberal. So why aren’t the tea party people advocating reversals of these tax rules? If they were, I’d be on the front lines waving the tea party flag. They just advocate for lowering taxes for the rich.People that pay interest on CC’s are usually people who have been laid off jobs and use credit cards to buy food and necessities. If the IRS allowed for an interest deduction, think of what would go back into the economy! Better yet, how about giving banks incentive NOT to charge 30% interest rates by taxing the profits gained from interest rates above 10%.
And the 1% “rich” pay 40% of the taxes! Sounds like a balanced approach to me.
@Slim–no, you would just categorize it as Interest (make sure this is a separate “interest” listing than any income interest, you can’t just delete one from the other). In Quickbooks you can set it up as an expense, and even specify different types of interest expenses. I think you can do that in Quicken and software from other (better) companies than Intuit…
@Ronald (and Guru). Wasn’t that the point of the article? And wasn’t that answered in the article?Just curious.I actually came here to find out how to categorize credit card interest as a business expense. The credit card was used for repairs, but the interest shouldn’t be classified as ‘Repairs’, should it?Thanks!
can you deduct interest from credit cards ?Thanks
Nope, sorry! It used to be deductible but that was changed in the 80′s under President Reagan.