Bill4Time Payments - Are Credit Card Fees Tax Deductible?

IS IT LEGAL TO CHARGE MY CLIENTS AN ADDITIONAL FEE FOR ONLINE PAYMENTS?

Since launching and prior to Bill4time Payments, we have received many inquiries about extending credit card processing fees or charging a surcharge to your end-clients. As regulations vary from state to state and consumer protection laws change daily - we do not recommend extending these charges to your end-client. Please check with your local, state and federal jurisdictions to confirm whether surcharging is permissible in your area and for your particular use-case.

YOUR CREDIT CARD FEES MAY BE TAX DEDUCTIBLE

As a general rule - for expenses to be deductible - they must be both ‘ordinary’ and ‘necessary’. The good news is that in today’s world credit card processing fees are considered ordinary and necessary for businesses of all sizes!

The IRS recognizes merchant service fees as an essential operating cost, so your company may be able to deduct these fees on your tax return. Your business may be able to deduct the full cost of these merchant services fees on Schedule C. Although these deductions do not directly affect your company’s total tax liability - this tax deduction is subtracted from your gross earnings, which allows you to pay taxes on less of your business’s income. We recommend consulting with your CPA or local tax professional to confirm that credit card transaction fees and other fees for online payments for your business are deductible and ensure you are doing so properly.

If you are utilizing Bill4Time Payments 1099-K's will be sent to the address on file for your organization for the EIN that was submitted.

Although the following do not constitute legal or tax advice, we recommend finding more information about the deduction of transaction fees as a business expense at the following sites:

https://www.bankrate.com/finance/credit-cards/are-credit-card-fees-tax-deductible/

https://www.creditcards.com/credit-card-news/deduct-credit-card-fees-small-business-taxes/ 

https://www.business.com/articles/business-credit-card-fees-tax-deductible/