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CHARGE!
December 29, 2007
Yesterday's post explained how "the check is in the mail" rule works for getting deductions this year. But who uses checks anymore? All those new economy whippersnappers use credit or debit cards or online transfer services like Paypal to pay their bills. When does a cash-basis taxpayer -- and that means almost all humans -- get deductions for those transactions?
For expenses charged to a credit card, the expense is deductible the day the expense is charged to the card -- not the later date when you pay the credit card company.
If you use a debit card or Paypal, the deduction likewise should occur for tax purposes at the time of the initial transaction. A debit card immediately transfers funds from your bank account, while Paypal either debits your bank account or charges your credit card, giving you the deduction either way.
There are two more installments in our series of 2007 year-end tax planning posts, assuming 2007 isn't extended. Collect them all!
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Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not neccesarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to
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