The Reason Why Everyone Love Can Business Credit Card Interest Be Deducted | can business credit card interest be deducted

If you're a small business owner then you have probably wondered whether or not it's possible to deduct business credit card interest from your personal taxes. While the tax law does permit you to deduct interest paid on your credit cards, the tax code doesn't explicitly say you can do so. The IRS has established a number of qualifications that must be met in order to be eligible for a tax write off, and one of them is that the business must be engaged in a trade or occupation for at least one year. If your business meets this qualification then you may be able to deduct the interest paid on your business credit card.

The second qualification is that your business must generate at least fifty percent of its revenue from transactions rather than merchandise or goods. Again, this qualification is specific and strict, and is not a broad-based rule. To meet this qualification you must file your income tax returns with the IRS. Then, the next time you file your income tax return the amount you deducted will be applied to your outstanding credit card accounts.

This isn't the only way to reduce your tax bill. If your business has a lot of overhead expenses such as rent, utilities, security and maintenance and insurance then those costs can also be written off. This type of reduction is called a professional tax deduction. Any tax accountant or CPA can help you determine if your business qualifies for this reduction. If it does, it can save you a lot of money on your tax return.

Another way to reduce the amount of interest you owe on your business credit cards is to transfer the balances to a low rate introductory offer card. These offers are often offered by banks and financial institutions to people just starting out. While they will offer zero interest for a period of time, the interest you accrued can still be rolled over into another introductory offer. After the introductory period, they change your rate to regular interest. This can save you hundreds of dollars in interest payments over the course of your business's life. Be sure to look at all the terms of the introductory rate to make sure there aren't any hidden fees associated with it.

A large percentage of business credit card debt is secured. Many small businesses are now using home equity loans and personal property like boats and cars as collateral for the loans. Because these loans can be huge due to their size, many businesses may not qualify for the deductible. Check with the individual credit card company to find out if the business can be used as the collateral and if so, how much of the deductible will be.

There is another way that interest can be deducted from your business credit card. If you have an account with a bank, any purchases made with the card can . . . . . . be included in your income. Any interest paid on this account can be deducted when you file your taxes. The deductible can be up to the amount of interest paid, but this can affect your taxes.

Be sure to check what the interest rate will be for your credit card. There is usually no minimum payment required, but the interest rate will probably be higher than a normal card. If you can afford it, you may want to get a card that offers a lower interest rate. Make sure to keep good records, as well as keeping track of each purchase you make. Your tax adviser will be able to help you figure out if a higher interest rate is a good idea for your credit card.

It may be tempting to use your credit card for non-business purchases, but this can be a bad move. You could end up paying a lot of money back in interest and penalties, not to mention a large amount of money in taxes. Try to limit yourself to a small amount of purchasing power each month. You don't need to spend more than one hundred dollars a month. Also, make sure to pay the balance in full each month, or at least before the due date.

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Is Credit Card Interest Tax Deductible? Bankrate – can business credit card interest be deducted | can business credit card interest be deducted
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