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IRS Says Credit and Debit Card Fees For Tax Payments Are Deductible

- by Roger McEowen

April 8, 2009

In a recent news release, IRS has reversed its previous position and announced that credit or debit card convenience fees associated with the payment of federal tax are deductible as miscellaneous itemized expenses.  Only miscellaneous expenses that exceed 2 percent of a taxpayer's adjusted gross income are deductible, but IRS says that the fees charged by card processors average about 2.5 percent of the amount of the tax payment.  The announcement reverses the IRS position set forth in IRS Publication 529 in which IRS said that while taxpayers may pay tax via credit card, they can't deduct any convenience fees.  IR-2009-37.