Are you tired of ATM fees eating into your savings? You’re not alone. The average ATM fee is now $4.73, says Bankrate. If you make just two withdrawals a month, you could spend $113.52 a year on fees. But, could you get some of that money back at tax time? Let’s look into the tax implications of ATM fees and if you can claim ATM fees on taxes.
ATM fees are a big annoyance, but smart people are finding ways to cut them down. For example, Alliant Credit Union gives $20 a month to debit card users. Banks like Axos Bank offer unlimited ATM reimbursements. And, LendingClub returns all ATM surcharges at the end of each cycle.
Key Takeaways
Key Takeaways
- The average total ATM fee in the U.S. stands at a record $4.73.
- Using out-of-network ATMs can cost you $113.52 annually with just two withdrawals per month.
- Alliant Credit Union, Axos Bank, and LendingClub offer options to reimburse or waive ATM fees.
- Using in-network ATMs and choosing banks that refund ATM fees can save significant money.
- Large single withdrawals minimize the impact of ATM fees.
Stay tuned as we delve deeper into whether ATM fees are tax-deductible and explore other tax-saving opportunities you might not want to miss!
Understanding ATM Fees
When asking if are atm fees tax deductible, it’s key to know the different ATM fees, their costs, and how to avoid them.
Types of ATM Fees
ATM fees come in two main types: the surcharge from the ATM owner and the out-of-network fee from your bank. The average surcharge is about $3.15. Your bank might add another $1.58 for using an out-of-network ATM. These fees can add up, averaging $4.73 per use in 2023.
Average Costs of ATM Fees
The average ATM fee was $4.73 in 2023, according to Bankrate. This includes a $3.15 surcharge and a $1.58 out-of-network fee. Fees have gone up by 7 cents from last year and 60 cents in the past decade. Extra services like check cashing or money orders can cost $5 to $20 a month, but some accounts may waive these fees.
Ways to Avoid ATM Fees
Instead of thinking about the tax benefits of atm fees, aim to avoid them. Here are some smart ways to do so:
- Use in-network ATMs: Chime® Checking Account gives you access to over 60,000 fee-free ATMs. This can save you a lot of money.
- Get cash back at point-of-sale transactions: Many retailers offer this service for free.
- Leverage digital payment apps: Apps like Venmo and Zelle let you send money fast and securely without using cash.
- Withdraw larger amounts less frequently: This can cut down on the number of fees you pay.
- Choose banks with fee reimbursements: Some banks, like Ally Bank, reimburse up to $10 per statement period for ATM fees and don’t charge monthly maintenance or overdraft fees.
Using these tips can help you avoid fees and understand better when asking if are atm fees tax deductible.
Are ATM Fees Tax Deductible?
With banking costs on the rise, many wonder if ATM fees can be deducted on taxes. Unfortunately, most ATM fees for personal use don’t qualify as deductions with the IRS.
General Rules on Deducting Bank Fees
The IRS allows deductions for “ordinary and necessary” business expenses. For instance, fees on a business account used only for business can be deducted. It’s key to know that these expenses must be on a business account to be deductible.
Self-employed people and solo entrepreneurs report these fees on Schedule C of their taxes. Using accounting tools like QuickBooks or FreshBooks helps keep track of fees. This ensures you follow IRS rules on what expenses you can deduct.
Specific Situations for Deduction
Some ATM fees can be deductible if they’re for business purposes. For example, fees from withdrawing cash for a business trip or other work can be claimed. Small business owners might also deduct other expenses like:
- Mortgage interest on business properties
- Half of business meal costs
- Payments to freelancers or contractors for work
It’s important to keep good records and documents for these deductions. Make sure to show how the ATM fees relate to your business. Getting advice from a tax expert can help you make the most of your deductions.
Other Tax Deductions and Credits to Consider
Looking beyond deducting ATM fees on income tax, there are many other deductions and credits that can help lower your taxes. Knowing about these can help you plan to save more on taxes. It’s all about making the most of what you can deduct and claim.
Common Personal Deductible Expenses
First, check if you can deduct common personal expenses. These are usually tax-deductible. Here are some important ones:
- Mortgage Interest: Homeowners can deduct this, which can greatly reduce their taxes.
- Property Taxes: You can deduct local and state property taxes to lower your taxes even more.
- Medical and Dental Expenses: These are deductible if they go beyond a certain part of your income.
- Charitable Contributions: Giving to approved charities can also lower your taxes, encouraging giving back.
Don’t forget about income tax credits that can be very helpful. Here are a few you should know about:
- Education Credits: These credits can help pay for education costs, like the American Opportunity Credit and Lifetime Learning Credit.
- Energy-Efficient Home Improvement Credits: Upgrading to energy-efficient appliances and home improvements can earn you credits to reduce your taxes.
- Child Tax Credits: These credits can ease the financial load for parents, lowering your taxes significantly.
The Tax Cuts and Jobs Act (TCJA) changed things, making some deductions less useful unless they’re more than the standard deduction. For 2022, the standard deduction is $12,950 for singles, going up to $13,850 in 2023. For those who qualify as a widow(er), it’s $25,900 in 2022, increasing to $27,700 in 2023. It’s smart to talk to a tax or financial advisor to see how these changes affect you. They can help you make the most of deductions and credits, including possible ATM fees.
Conclusion
Understanding ATM fees and their tax implications can be confusing. The answer to “are ATM fees tax deductible” for personal accounts is usually no. But, there are exceptions for business or investment activities. If you’re on the business side, remember to consider ATM fees as a tax deduction.
Dealing with tax deductions can feel overwhelming, but you’re not alone. It’s important to watch for banks that refund fees and stay updated on ATM charges. There are also other tax deductions you might be eligible for. Knowing about these can make tax season easier.
When tax season comes, getting professional advice is a smart move. A tax expert can make sure you follow IRS rules and get the most from your deductions. Tax season is a chance to learn and save money. So, next time you wonder “are ATM fees tax deductible?” remember, knowledge is key—and it can save you money.
