Fees On Tax Payments Deductible, IRS Confirms
Mike Godfrey, for LawAndTax-News.com, Washington
Credit or debit card convenience fees charged for
paying federal individual income taxes electronically
are deductible for some taxpayers who itemize, the
Internal Revenue Service (IRS) has announced.
Federal law bars the IRS from paying any fees
associated with these credit or debit transactions. Card
processors normally charge taxpayers for convenience
fees when they use their credit or debit card to pay
taxes. Fees vary but average about 2.5% of the tax
In reassessing a previous position, the IRS has
decided that the convenience fees associated with the
payment of federal tax, including payment of estimated
tax, can be included as a miscellaneous itemized
deduction. However, only those miscellaneous expenses
that exceeded 2% of the taxpayer’s adjusted gross
income can be deducted.
The IRS has warned that not everyone who pays the
fees will be able to deduct them. Taxpayers first must
be eligible to file a Form 1040 Schedule A to itemize
their expenses. Further to this, taxpayers must have
enough miscellaneous expenses to exceed the 2%
threshold. These expenses include items such as tax
preparation costs, job search expenses and unreimbursed
For details on claiming miscellaneous deductions and
figuring the 2% limit, the IRS has urged taxpayers to
read Publication 529. The fees are deductible in the tax
year they occur. For example, fees charged to payments
made during 2009 can be claimed on the 2009 return filed
Most individuals still pay their federal tax
obligations by check, but last year more than 4 million
taxpayers electronically paid their taxes.
The IRS has emphasized that there are free options
available, explaining that taxpayers can have funds
electronically withdrawn from their bank accounts or use
the Electronic Federal Tax Payment System (EFTPS).
Payments can be made either on-line or by phone, 24
hours a day, 7 days a week.