A few years ago I had a client who was in the process of shutting down his sole proprietorship. He was still paying on a credit card he’d used to purchase supplies when his business was still operating.
The payments on the card were substantial. The client was convinced he should be able to deduct the full amount of the credit card payments.
He was disappointed when I told him only the interest portion was deductible.
I wrote about this in detail back in February.
Business expenses paid with a credit card are deductible in full when the purchase is made, regardless of when the credit card bill is paid.
In my client’s case, he had accumulated a large amount on this credit card over the years, and he was still paying it down while he was scaling back his business.
But all of the purchases made on that card through the years had been deducted in full when the purchases were made. The current payments being made on the card were not deductible, except for the interest portion.
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