Estimated Tax Processing Fee

[rae09]

Hello,

Can I write off processing fee for paying the estimated tax with credit card as business expense?
I'm a sole proprietor (DH income is on W2, MFJ) and would like to use credit card so I can meet minimum spending/collect points.
I searched but couldn't find a clear answer to this.

Thank you.

[SeattleCPA]

I don't think so. First, it sounds like you don't have a business schedule (e.g., a Schedule C) in your return so there's not place to put a business expense.

Second, paying a CC charge so you get miles or points wouldn't be a business or production of income expense or miscellaneous itemized education anyway...

[rae09]

I have Schedule C. This is to pay mostly my SE tax.

Accumulating points is not the business activity. But since the SE tax is a lot, I would love to get points paying with my business CC instead of with cash/check.

[CareCPA]

Since these taxes are not a business expense, it would surprise me if the IRS viewed the fees charged to pay these taxes as a business expense.

One point where the nuances are often overlooked: passthrough entities are not taxed for federal income tax. It's an obvious concept, with some interesting consequences.
For example, the business (or schedule C in this case) does not pay tax on the income. The individual pays tax on their share of income. If you were paying quarterly estimates on W-2 income (instead of withholding), would you expect the fees to be deductible in that case? I wouldn't, so by extension I would not expect the fees you mentioned to be deductible.

Note: I have no case law to support this, just one guy's musings.

[rae09]

Hi FrugalGrad,

Thank you for the input. I see where you're coming from and I agree, W2 qtrly estimate is not deductible.
However, can it also be argued that since I have a legitimate business, and the business income results in SE tax (which non pass through entities get to deduct their 50% as business expense), would I at least be able to claim 50% of the SE tax processing fee?

This is not a huge amount since the fee is ~2% but I'm just wondering :)

[CareCPA]

I guess?
I personally probably would not. The risk/reward to me is not worth it since I haven't done enough research into it. Another accountant may decide differently.

[BTDretire]

How about the stamps I put on my quarterlies and the milage taking it to the post office?

[cadillacmike]

I don't follow why it isn't deductible. If you buy tax prep SW you can deduct the cost of that SW. If you actually drive to the PO and mail it, and pay for certified mail RRR, that's deductible, so why not a convenience fee charged by the gub-mint for you to pay a tax amount?

[CareCPA]

I don't follow why it isn't deductible. If you buy tax prep SW you can deduct the cost of that SW. If you actually drive to the PO and mail it, and pay for certified mail RRR, that's deductible, so why not a convenience fee charged by the gub-mint for you to pay a tax amount?

For your personal taxes? Are you sure about that?

[cadillacmike]

I don't follow why it isn't deductible. If you buy tax prep SW you can deduct the cost of that SW. If you actually drive to the PO and mail it, and pay for certified mail RRR, that's deductible, so why not a convenience fee charged by the gub-mint for you to pay a tax amount?

For your personal taxes? Are you sure about that?

Business, multi member LLC treated as an S-corp

As for the tax prep SW for a personal 1040, they even have a place in the misc itemized deductions for the cost of the package, so yes. I'm pretty sure both turbo tax and HRB have this.  There is no other use for the SW.

[CareCPA]

Tax prep fees get lumped in with other miscellaneous deductions and need to exceed 2% of your AGI, and this assumes you itemize in the first place.
Estimated tax payments are personal taxes. There is no such thing as a federal estimated tax for an S Corp (ignoring built in gains for the moment). See my earlier message about how the taxes are assessed at the individual level and not on the business.

[cadillacmike]

Tax prep fees get lumped in with other miscellaneous deductions and need to exceed 2% of your AGI, and this assumes you itemize in the first place.
Estimated tax payments are personal taxes. There is no such thing as a federal estimated tax for an S Corp (ignoring built in gains for the moment). See my earlier message about how the taxes are assessed at the individual level and not on the business.

Ok, we're on the same page WRT tax prep fees.

I got the OP's estimated taxes confused with S-corp quarterly payroll tax payments, that is if if the S-corp  is paying "salary / wages" to its members / officers. And then I'm not sure if the S-corp pays the payroll tax (SE tax) or if the individual members have to pay it??? But that's not the OPs question. I'll post any questions I have WRT S-corp and Corp/LLC member SE tax payments in a new post.