- 1). Designate a certain credit card for business-related expenditures. To facilitate record-keeping, it is recommended to designate a certain credit card that will be used for business expenses. Since all deductible transactions are recorded in one place, this will make corporate reimbursement easier and will reduce the risk of omitting any tax deductions when taxes are being prepared.
- 2). Log business expenditures made with personal credit cards. If expenditures are sporadically spread across different credit cards, it may be harder to track and document for tax purposes. Thus, to simplify things, keep a log of business-related expenditures so the transaction details can be available for substantiating a Schedule A unreimbursed employee expense itemized deduction in the future.
- 3). Repay owners and employees on a regular basis for business expenditures made with their personal credit cards. To properly claim a deduction, a company must have incurred the cost of the deduction. Accordingly, it should promptly reimburse owners and employees for business expenditures they have made on behalf of the company on their personal credit cards.
- 4). Use credit card receipts to optimize the sales tax deduction. If you itemize deductions and maintain adequate records, you may choose to deduct the actual sales taxes paid over the year instead of the general sales tax amount from the optional tables issued by the Internal Revenue Service. This form of record-keeping can result in a significantly larger tax deduction.
- 5). Deduct interest that can be allocated to business expenditures. If a taxpayer uses a personal credit card 40 percent for business and the remaining 60 percent for personal expenses, he can deduct 40 percent of the credit card interest as a business expense. The other 60 percent is personal interest and accordingly is not tax deductible.
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