Business credit card interest belongs on Line 16b, interest, other.
Why line 16b
Interest on a card used for business purchases is other business interest, which is line 16b. Line 16a is only for mortgage interest on real property paid to banks and similar institutions, so a card never lands there. If the card mixes personal and business spending, only the interest traceable to the business purchases is deductible, which is the whole argument for keeping a dedicated card.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so business credit card interest lands on Line 16b without you sorting it.
Start for freeWhat business credit card interest is confused with
- Line 16a, interest, mortgage
- Line 16a is reserved for mortgage interest on real property paid to a financial institution; every other business interest, card interest included, is 16b.
- Line 27a, other expenses
- The card's annual fee, late fee and foreign transaction fees are not interest; they are bank charges in other expenses on line 27a.
- not deductible, not deductible
- Interest traceable to personal purchases on the same card is personal interest and is not deductible at all.
Examples that belong on line 16b
- $143 of interest on a business card carrying a $4,200 balance of supply purchases
- Interest on a promotional balance that started accruing in month 13
- $38 of finance charge on a fuel card used only for the work truck
- Interest on a card used to buy $9,000 of equipment, deductible even though the equipment itself is depreciated
What does not belong here
- The annual fee, which is line 27a
- Late payment and over-limit fees
- Interest on the personal share of a mixed-use card
- The purchases themselves, which belong on their own expense lines
What to keep
Keep the monthly statements showing interest charged separately from fees, plus enough purchase detail to show what the balance paid for. A mixed card needs an allocation you can reproduce.
Other expenses on line 16b
| Expense | Line |
|---|---|
| a merchant cash advance finance charge | Schedule C, Line 16b |
| business loan interest | Schedule C, Line 16b |
| car loan interest | Schedule C, Line 16b |
| interest on a personal loan used in the business | Schedule C, Line 16b |
Related lookups
- Where does business mortgage interest go?
- Where do client gifts go on Schedule C?
- Is a car payment deductible 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.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so business credit card interest lands on Line 16b without you sorting it.
Start for free