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- CREDIT CARDS ARE NOT ALL ALIKE FOR TAX DEDUCTIONS
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- You have probably often heard that if you charge
- something on a credit card it is deductible in the year
- you charge it, not the year you pay the bill. That is
- almost true, but it has an exception that can leave you
- stuck. Credit cards are not all the same under the tax
- rules.
- The general rule is that you only get a tax
- deduction in the year you actually pay for a deductible
- expense. But there's normally an exception when you
- pay with a credit card, as for tax purposes, payment is
- considered made on the date of the transaction, not on
- the date you pay the credit card company. Lots of tax
- advice publications tell you this.
- What many of them forget to tell you is that there
- is a critical exception to the exception. If you
- charge a deductible expense on a credit card issued by
- the company supplying the deductible goods or services,
- you can't take a deduction until the credit card bill
- is paid. If you use the store credit card for your
- office supplies, or your personal prescription, you
- can't deduct it until you pay. But if you use your
- Visa card you can take the deduction immediately. Keep
- this in mind near the end of the year, when you may
- want to choose which card you use based on which year
- you want the tax deduction to be in.
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