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Level 2

Credit Cards

Should credit card payments show up on the P & L as an expense?  For tax purposes how do you account for credit card payments which usually post to the credit card account.

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Best answer April 05, 2020

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Community Champion

Credit Cards

@Randy6RE: So if I charge $1000 on a credit card for office supplies in 2019 and in 2019 I only pay $750 of that credit card how much can I write off for 2019?

 

All of it.  CC charges are considered same as cash, both for GAAP/Management purposes and for taxes.

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Community Champion

Credit Cards

No, they shouldn't.  The charges themselves are an expense, like checks in a bank account.  Later, paying the debt those charges create is not an expense.

 

This is similar to a mortgage or other loan, where the payment is not an expense, though the interest the loan charges is.

 

 

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Level 2

Credit Cards

Thank you.   So if I charge $1000 on a credit card for office supplies in 2019 and in 2019 I only pay $750 of that credit card how much can I write off for 2019?

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Moderator

Credit Cards

Hello, @Randy6.

 

You can record a credit card credit for the remaining $250 and use another account for that refund to write off the amount. You can set up a clearing account to move your money from one account to another easily. Just refer to this article for details: Set up a clearing account

 

Here's how to enter a credit card credit in QuickBooks:

 

  1. Go to the Banking menu and click Enter Credit Card Charges.
  2. Select the radio button for Refund/Credit.
  3. Enter the necessary details.
  4. Choose the account for the refund.
  5. Click Save & Close when done.

credit card credit.PNG

You may also refer to this article for more info about removing vendor balances: Write off customer and vendor balances.

 

If you have other questions, please feel free to drop by again. I'm here to help. Take care and have a good one.

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Community Champion

Credit Cards

@Randy6RE: So if I charge $1000 on a credit card for office supplies in 2019 and in 2019 I only pay $750 of that credit card how much can I write off for 2019?

 

All of it.  CC charges are considered same as cash, both for GAAP/Management purposes and for taxes.

View solution in original post

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Community Champion

Credit Cards

@IntuitLily 

Your answer has nothing to do with the question and isn't appropriate.

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