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MrMiyagi
August 13, 2019
Question

Recording deductible/non deductible debt?

  • August 13, 2019
  • 1 reply
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I regularly use a credit card, for both deductible and non deductible expenses.

 

Is there an easy way to track the amounts spent and totals owing on each, so I can apportion interest paid to deductible/non deductible as well?


Also, when I pay the monthly minimum payment, how would I know whether to allocate it to deductible/non deductible?

1 reply

C
Cvbose
September 24, 2019

This is something that would (in theory) be possible, but would be incredibly time intensive, and not generally, if ever very accurate.  You certainly could create two accounts.  One as Non-Deductible Interest, and one as Deductible Interest.  The interest (and other fees such as late charges) on your credit card is provided on each statement, but is not calculated as a "portion" of your minimum payment.  It's the interest on the remaining balance.  That interest is calculated differently for different credit cards.  Your tax preparer will be the one who determines what portion of interest will be unallowable.  I would assume you're talking about something like meals and entertainment.  Those are only partially deductible, so the associated interest would (I assume) be only partially deductible.  As far as fines/late charges/penalties, you should have a separate account for those, and record them there 100% of the time.  However, I'm not a public accountant.  I'm familiar with those rules, but not an expert.  So there's an answer for what it's worth.

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