Tax Credit Vs Tax Deductible
November 6th, 2009Question: Can anyone please explain how the IRS views tax deductions of Finance charges from charge cards vs credit Line?
With a credit line I receive a 1099 declaring Interest paid from the bank. I receive nothing from the Credit Card company however both must be paid. My accountant does not believe A Business Credit Card Interest is Tax Deductible. I believe that both are viable forms of credit extension therefore reasonable and legal forms of business to finance service or goods. Can anyone provide additional information to short term finance interest expenses. Thank You. Business Minded.
When I said a line of credit it is a business line. Not a home line of credit. The Business Credit card is actually used strictly for business. It is used to purchase equipment or short term purchases of 1000 to 10,000 for 2 to 6 months because my suppliers only except credit cards. I could pay off with line of credit each month however, payment terms are not as flexible as Credit Card.
Answer: Credit and finance costs are always valid business expenses as long as they are reasonable and necessary. If your accountant says that they are not, find a competent accountant; yours is not.
This assumes of course that you are talking about business expenses. A “business” card used for personal expenditures would not generate deductible interest of course, whether you owned a business or not.
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