Credit card annual fees - how to categorize?

Go-Bruins
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hi all,

any CPA's in here? how should I record a credit card annual fee (like Amex has)?

should it be categorized as "dues and memberships" as an expense account?

thanks in advance.
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Commented:
If you prepare your own taxes, you can deduct these costs:
Tax-planning and tax-preparation manuals
Tax-preparation software
E-filing fees
Convenience fees charged if you paid your tax electronically using:
MasterCard
Discover
American Express
VISA
Report these fees on Schedule A, Line 23 instead of Line 22.


http://www.hrblock.com/free-tax-tips-calculators/tax-help-articles/Deductions/Deductions-Subject-to-the-**fdIncomeLimit**-Limit.html?action=ga&aid=27079&out=vm

Commented:
didn't notice this was for quickbooks

Amex deducts their fees from deposits you receive; so effectively there are two accounting transactions to be recorded - a full receipt from customer/sale and an expense payment for Amex service fees.

There are two ways to do this on QBs, plus one other approach which I regard as "full accounting":

Cash accounting or no sales invoice had been issued (i.e. does not involve A/R)
• Make Deposit window under Banking menu - receive into an income account for the full value of sales followed by a second line, in negative value, for the service fee deducted and post to an expense account.

Customer was invoiced
• Receive Payments under Customers menu - enter actual amount received in bank and apply to invoice(s), then select "Write off extra amount" in the Underpayment box on the lower left corner to post the Amex fee to an expense account.

The "underpayment box" feature in receive customer payments window is a good design but I have discovered a problem (UK 2013 Pro version) - the VAT or sales tax accounting info in the write off box does not work. Amex fee may be exempt or zero-rated for sales tax in your country too, but what if next time you have to account for a different type of deducted expense with tax ?

The full accounting approach is to receive the payment in full into the bank (or a contra bank a/c) and pay the fees using Write Cheque or Pay Bills if a bill was processed. Reconcile the combined 2 entries on QBs bank register to one entry on the bank statement. (or transfer from contra bank a/c to the regular bank a/c the net amount).


https://community.intuit.com/questions/766425-how-to-make-american-express-deposit-bank-statment


hope that helps

Author

Commented:
Great info - thank you.

But how do I go about recording just the membership fee? For example, some of the Amex cards (Gold, Platinum) charge you an annual fee just for having the card.
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Commented:
Enter Finance Charges And Annual Fees For Credit Cards
https://help.quickbooks.intuit.com/en_US/kb/enter-finance-charges-annual-fees-credit-cards/6aqhmgdb2fph9:COMMUNITYV1


This article refers to QuickBooks Online

1.

Click Create (+) > Expense.

2.

In Bank/Credit account, enter the credit card that assessed the finance charge or annual fee.

3.

(Optional) Choose a Location/Department. If you don't see it, Location/Department tracking is turned off in Company Settings (or Account and Settings depending on what you see).

4.

Fill in the charge:
Payee  -Leave blank.
Date - QuickBooks automatically adds today's date. Change it to when you were charged.
Accounts - Enter an expense account to track charges or fees. If you need to create an expense account, type the name of the account, press Add, and then complete the Account interview:
Choose Expenses as the Category type.
Choose Bank Charges as the Detail type.
Amount - The amount of the fee. You can enter a calculation.
Sales tax - If applicable.
Memo -Optional. The memo appears in the register, and on reports that include this charge.

5.

Click Save and close (or Save and new to enter another expense).

Author

Commented:
Awesome. So it looks like it gets lumped into the same expense category as finance charges.

Thanks much.

Commented:
Yes, Essentially, it is a finance charge

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