Originally Posted by DCBob
This FAQ was taken partially out of context. The above FAQ was an answer in response to the convenience fee for paying Forms 940 and 941 EMPLOYMENT TAXES, NOT Form 1040 personal income taxes. Here is the heading on that page:
The Internal Revenue Service has expanded the credit card tax payment option for taxpayers. Beginning January 2006 taxpayers may use a credit card to make business tax payments towards the balances due on their current quarter Form 941, Employer’s Quarterly Federal Tax Return, and current year Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return. They will also be able to make credit card payments for balances due on the prior three quarters Form 941.
The answer to whether the convenience fee paid on personal income taxes (Form 1040) is deductible as follows:
The fee is a non-deductible personal expense; however, it is a deductible business expense.
Source:
http://www.irs.gov/efile/article/0,,id=101316,00.html
To clarify this answer: The portion of the fee allocable to taxes on business income is deductible as a business expense (e.g., on Schedule C or C-EZ); the portion of the fee allocable to taxes on nonbusiness income is not deductible as a business expense.
Thanks,
DCBob, for that very important clarification.
So does the above mean that though the FF miles may go to the employer's own account, and he/she can then use those miles for any purpose, including entirely personal ones, the convenience fee for business tax payments will be fully deductible? I considered it a good deal to buy UA miles at 1.245 cpm (actually a tad less, since the convenience fee earns miles too), but if the government will subsidize it so as to bring it down to less than .85 cpm, so much the better. (Is this really kosher, though?)