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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10152
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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In Regards to Form 1098 Reporting - If my institution is

Customer Question

Hi: In Regards ***** ***** 1098 Reporting - If my institution is facilitating Form 1098 Reporting for Individuals and Non-Individuals - The Credit Card Interest or revolving interest - Is that deductible?
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

...

I'd like to help here, but youll have to provide more specificity/detail.

...

Whose interest is this (whos's paying and who's receiving).

...

And what do you mean by "facilitating?"

...

If this is interest that YOUR business incurs as part of your ordinary expenses, to provide the service you provide, then yes, the interest is likely deductible.

...

See this from IRS:

...

Interest You Can Deduct

You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. It does not matter what type of property secures the loan. You can deduct interest on a debt only if you meet all the following requirements.

...

Reference: http://www.irs.gov/publications/p535/ch04.html#en_US_2014_publink1000243104

  • You are legally liable for that debt.

  • Both you and the lender intend that the debt be repaid.

  • You and the lender have a true debtor-creditor relationship.

Expert:  Lane replied 1 year ago.

Hi,

...

I'd like to help here, but youll have to provide more specificity/detail.

...

Whose interest is this (whos's paying and who's receiving).

...

And what do you mean by "facilitating?"

...

If this is interest that YOUR business incurs as part of your ordinary expenses, to provide the service you provide, then yes, the interest is likely deductible.

...

See this from IRS:

...

Interest You Can Deduct

You can generally deduct as a business expense all interest you pay or accrue during the tax year on debts related to your trade or business. Interest relates to your trade or business if you use the proceeds of the loan for a trade or business expense. It does not matter what type of property secures the loan. You can deduct interest on a debt only if you meet all the following requirements.

...

Reference: http://www.irs.gov/publications/p535/ch04.html#en_US_2014_publink1000243104

  • You are legally liable for that debt.

  • Both you and the lender intend that the debt be repaid.

  • You and the lender have a true debtor-creditor relationship.

Customer: replied 1 year ago.
My apologies if it wasn't clear. I am talking about Credit Card Interest. Not for an individual but for a business. If I have my own business and I am paying credit card interest - Is that interest considered deductible?
Expert:  Lane replied 1 year ago.

Yes, absolutely.

...

As you can see, credit card interest squarely meets all of the above criteria:

...

So as long as it's business USE it's deductible. As IRS says, above "Interest relates to your trade or business if you use the proceeds for a trade or business expense."

...

Thanks for the clarification

...

Lane

...

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.

Customer: replied 1 year ago.
if I am the issuing credit card institution, do we need to report to the IRS any finance charge for Small Business customers (sole props, partnership, and corporation)?
Expert:  Lane replied 1 year ago.

If you are engaged in a trade or business and, in the course of such trade or business, you receive from an individual $600 or more of mortgage interest on any one mortgage during the calendar year. You are not required to file this form if the interest is not received in the course of your trade or business. For example, you hold the mortgage on your former personal residence. The buyer makes mortgage payments to you. You are not required to file Form 1098.

...

If you are a credit card issuer to merchants, ...

Beginning in January, 2012, payment settlement entities (PSEs) are required by the Housing Assistance Tax Act of 2008 to report on Form 1099-K the following transactions:

  • All payments made in settlement of payment card transactions (e.g., credit card);
  • Payments in settlement of third party network transactions IF:
    -Gross payments to a participating payee exceed $20,000; AND
    -There are more than 200 transactions with the participating payee.

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