A personal expense on the business card is not a deductible business expense.
Why it is not deductible
Which card you used is not the test. Deductibility follows the nature of the expense, so a personal purchase on the business card is simply a draw from the business and does not appear anywhere on Schedule C. Record it against owner equity, not against an expense line. The practical risk is bigger than one grocery run: a card with mixed charges on it invites a reviewer to question everything else on the same statement, which is why the cleanest habit is to repay the business for the personal charge and label it as a draw in the books.
Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for a personal expense on the business card is already written down.
Start for freeWhat a personal expense on the business card is confused with
- Line 27a, other expenses
- Pushing unclassified card charges into Part V as other expenses is the error this page exists to stop, and an unusually large line 27a is exactly what draws attention to it.
- Line 25, utilities
- An item with a genuine business share, a shared phone or internet bill, is split by business-use percentage rather than being all deductible or all personal.
- Line 26, wages
- A personal expense you pay for an employee is not a draw but compensation, which is wages on line 26 and belongs on their W-2.
Examples people try to deduct here
- $140 of groceries on the business card: owner draw, no deduction
- $38 cinema tickets on the business card: owner draw
- $900 family holiday flight on the business card: owner draw, and not line 24a
- $85 phone bill with 60% business use on the business card: $51 deductible, $34 draw
- $240 of tools charged to the personal card: still deductible, because the card is not the test
What does not belong here
- Deducting it because it ran through the business account.
- Hiding it in Part V as a miscellaneous or uncategorised expense.
- Treating the repayment to the business as income.
- Assuming a business expense on a personal card is lost, since it is not.
What to keep
Code personal charges to owner draws in the books as they happen and keep the itemised receipt for anything mixed. A statement total with no receipt behind it is the weakest position you can be in on a mixed-use card.
Other things that are not deductible
| Expense | Line |
|---|---|
| a business suit | Not deductible |
| a government fine or penalty | Not deductible |
| a parking ticket | Not deductible |
| a spouse's airfare on your business trip | Not deductible |
| a traffic ticket | Not deductible |
| an unpaid invoice | Not deductible |
| commuting mileage | Not deductible |
| country club dues | Not deductible |
| estimated tax payments | Not deductible |
| federal income tax | Not deductible |
| groceries for your home | Not deductible |
| interest on underpaid federal income tax | Not deductible |
Related lookups
- Where do client gifts go on Schedule C?
- Where does internet go on Schedule C?
- Can I pay my child and deduct it on Schedule C?
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for a personal expense on the business card is already written down.
Start for free