Is credit card interest tax deductible?

A tax deduction is an item recognized by the Internal Revenue Code as fully deductible against your taxable income if paid in the form of cash or cleared check or credit card. Items such as home mortgage interest, charitable contributions, sales tax, state income tax, medical deductions in excess of a certain threshold and miscellaneous itemized deductions in excess of 2% of your adjusted gross income cover most of the allowable deductions on the federal form 1040. In addition, capital gain losses can be taken with certain limitations as can losses from real estate and other business transactions. Hope this helps and good luck... read full answer

The best credit card to pay taxes is the Alliant Cashback Visa® Signature Credit Card or the Chase Sapphire Preferred® Card for those who don’t plan to carry a balance. However, the Wells Fargo Reflect® Card is the best credit card for a tax payment if you’re planning on carrying a balance. All 3 of these cards have rewards rates or redemption values that are worth more than the IRS’s processing fee costs (1.87%-1.99%). But of the 3, only Wells Fargo Active Cash® Card has a 0% APR intro period.... read full answer

Alliant Cashback Visa can give up to 2.5% (if you meet requirements) on all purchases, which is higher than the lowest processing fee for federal taxes. The maximum amount of cash back you can earn on this card is $250 per billing cycle at the 2.5% rate, however, so only use this card if your tax bill is less than $10,000. Alliant Cashback Visa has a $0 annual fee.

Chase Sapphire Preferred is another good contender for paying a tax bill because of its signup bonus: 60,000 points ($750 in travel through Chase) after spending $4,000 in the first 3 months. The return is more than most people pay in IRS processing fees – and if you owe $4,000 or more in taxes, you can actually earn the bonus by paying your tax bill. The card also gives 1 - 5 points per $1 spent, which means you’ll earn 1 point for every dollar of your tax bill in addition to the intro bonus. Each point is worth 1.25 cents when redeemed for travel. The annual fee is $95.

If you’re planning to carry a balance after you pay a tax bill with a credit card, Wells Fargo Active Cash® Card is a good financing option because it has an intro purchase APR of 0% for 15 months from account opening and a $0 annual fee. The initial bonus for this card - and its best tax-paying feature - is $200 cash rewards after spending $1,000 in the first 3 months. Paying taxes with this card will give 2% cash rewards - higher than the IRS credit card processing rate.

Paying taxes with a credit card may sound like a no-brainer, but it isn’t the best idea in many cases. It could end with a high-interest debt and a damaged credit score. Those planning on paying with plastic should weigh out the pros and cons carefully, and having the right credit card is a big part of the decision.

Car insurance is tax-deductible for self-employed people who use their car for business reasons, as well as for select other occupations. For example, car insurance is tax-deductible for armed forces reservists who travel for duty, some performing artists, and certain government employees who are paid via fees-per-service.

Business use means trips taken for work, but commuting to and from work is not deductible. For example, a photographer’s drive to her studio would not be deductible, but her drive from her studio to a client’s house during working hours would be. However, if the photographer had a studio in her house, then her drive from her home studio to a client’s house for work purposes would qualify as tax-deductible.... read full answer

How to Deduct Car Insurance on Taxes

Car insurance can be deducted by eligible taxpayers based on either mileage or actual cost. If you choose to deduct based on mileage, the official rate – $0.58 per mile in 2019 – incorporates all the expenses that go into driving, so insurance cannot be deducted separately. On the other hand, deducting based on actual expenses requires taxpayers to add up costs like insurance premiums, repairs, gas, tires, and registration fees.

Self-employed taxpayers can use Schedule C to deduct their vehicle expenses, whether using actual cost or mileage. Other eligible taxpayers can use Form 2106 for Employee Business Expenses.

Car Insurance Tax Deductibility Tips

• If a car is used exclusively for business, the entire amount of its actual cost can be deducted.
• If a car is driven for both business and personal reasons, the total cost can be prorated. For example, if the car is used for business half of the time, half of its actual cost can be deducted.
• If a taxpayer is deducting based on mileage, they should keep careful track of their work-related miles and can deduct only that amount.

Regardless of which type of deduction you choose, it’s important to keep careful records of business vehicle use. In addition, it’s usually best to calculate your deduction using both the actual value and mileage methods, so you can choose the method that gives you the highest tax savings. If you’re still unsure whether you can deduct your car insurance, visit the IRS website or talk to a tax expert.