The Internal Revenue Service has recently announced that credit and debit convenience fees charged for paying federal individual income taxes electronically are now deductible as a Miscellaneous Itemized Deduction, subject to the 2% floor. A taxpayer must itemize to take advantage of this deduction, as well as have enough miscellaneous expenses to exceed the 2% AGI threshold.
Card processors normally charge taxpayers convenience fees when they use their credit or debit card to pay taxes. These fees average around 2.5% of the total tax payment. While most individuals still pay their taxes by check, electronic payment methods are becoming more popular every year.
These convenience fees are deductible in the tax year in which they are paid, not the year associated with the tax liability. If you have not deducted these fees in the past, contact your tax preparer to determine if it would be advisable to amend your return.
There are other fee-free ways to pay your taxes electronically. Through the IRS website, you can have funds electronically withdrawn from your account, or you can utilize the Electronic Federal Tax Payments System.
If you would like any further information on this topic or other year-end tax planning items, please contact Henssler Financial at 770-429-9166 or experts@henssler.com.
Disclosures:
This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
