Can I Deduct Overdraft Fees When I File Taxes?

by Madison Garcia
Overdraft fees on your personal bank account are never tax deductible.

Unfortunately, individuals can't deduct overdraft fees on their tax return. There are some bank-related expenses that individuals can deduct, but the expenses must be related to investment income and the individual must forgo her standard deduction. Businesses, on the other hand, are allowed to deduct overdraft fees when they file taxes.

Personal

Overdraft fees are not deductible on your personal tax return. If you choose to itemize your deductions instead of taking the standard deduction, you can deduct certain bank fees and charges. However, the fees must be directly related to earning investment income. For example, you could deduct fees paid to a broker or charges for early withdrawal of a certificate of deposit. Overdrafts charges, monthly service fees, ATM-use fees and check-writing fees don't fall into this category.

Business

Individuals can deduct overdraft fees on business tax returns. Businesses are allowed to deduct almost all expenses associated with doing business, and bank fees fit that category. Sole proprietors can deduct overdraft charges on their tax return, as long as the bank account is solely used for business purposes.

About the Author

Based in San Diego, Calif., Madison Garcia is a writer specializing in business topics. Garcia received her Master of Science in accountancy from San Diego State University.

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