Before we begin, we want to say one thing; it is a complicated process to do. But nonetheless, we wanted to present it. For next year, you can use a 2020 income tax calculator to ease up the calculations. But right now, let’s see if using a credit card would be a good idea. You see, by any means, you can reduce your tax bill, it is a good idea. So, when you are preparing for your tax returns, you should take the help of anything which might help.

For Business Purposes

Well, if you are a business owner, small or medium enterprise, you can deduct credit card and their fees to reduce your tax bill. However, the card must be used only for business purposes. If you used it for any other thing, you might not be able to get the deductions. Why we are saying this, well During the IRS audit, they will check if you had used the business card for your usage. So, it's better to have a clean record rather than answering complicated questions.

You will use Schedule C to report your Business profit or loss. The business fees and interest will get deducted from the same Form. On the second page, you will have the title “Other expenses.” There fill all the details. In short, we are offsetting your business income. But as we said, it depends upon you if you like to pay credit card internet only for the sake of tax deduction. If you can, pay off every penny on balance. If you have any other interest to deduct the tax bill, you should use them. For example, if there is a student loan or a mortgage loan. Run the number before you make a decision. Now from the Business purpose, let's move onto the personal credit card expenses.

Tax Deductions for Personal purposes from Credit card

Here we have some bad news for you. You can not use a personal credit card for tax deductions. However, you can use credit card convenience fees for deduction expenses that are affiliated with paying taxes. You will need to form Schedule A for it. This form is also used for Itemizing. Here the rules get complicated. If you are had miscellaneous expenses like safe deposit tax, investment fees or tax preparation fees, you can also mention it here.

So, these were our blog on using a credit card for your reducing your tax bill. As we said, you can use the 2020 income tax calculator next year, if you do not want to waste time manually counting it.

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