Can I deduct credit card interest for money deposited into a MM account?
If I take a credit card cash advance and deposit this money into a money market account, is the interest on this credit card debt deductable on federal taxes? I have an unique credit card offer that would actually yield a significant profit if the interest is tax deductable.
Nice try, but credit card interest is not considered deductible interest.
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Unfortinately, credit card interest is deductable. Its my understanding that the only interest that is tax deductable is from a home mortgage or home equity loan.
Personal interest (i.e interest on credit cards) is not deductible. Only the interest on your principal residence plus one vacation home. However, interest paid for investments would be deductible as investment interest, and deductible to the extent of investment income. Typically, investment interest would be paid on something like a margin account. Now one may make the argument that you are using the cash advance to finance your investments, so you could argue that the interest is in fact investment interest. However, like I had said, investment interest is only deductible to the extent of your investment income, so your investment income would have to exceed the interest you paid in order for it to be fully deductible.
not only is Credit card interest not deductible, interest you gain from the money market is taxable, and the bank reports it to the IRS
Yes, you can take a deduction for the interest paid for the Money market account. However, if you use the credit card for personal use as well, you have to allocate the total interest paid between the investment and the personal use.
YES, you can deduct interest paid on investments, but you can only deduct the interest up to the amount of income your total investments generate (not just the money market if you have other investment income). You deduct this income the same as margin interest on stocks bought on margin credit.
You must report this on Schedule A, so if you don’t itemize, you won’t be able to deduct it.
The WealthBuilder
Tax Specialist
I would be looking at the investment interest rules. I am not convinced that the source of the loan, credit card versus say a margin account through a brokerage, is what controls. I think it is how the loan proceeds are used.
Withdrawal within credit limit with international card shall be no more than 50% of the credit limit and no more than RMB2000 a day. International credit cards shall not be used for withdrawal of foreign currency cash by overdrawing.
Interest-free payment grace period is not applied to withdrawal with credit limit with credit card and the withdrawal amount shall be no more than RMB2000 a day.
When balance is not enough in the credit card account, withdrawal can be made with the credit limit. Generally, overdrawing amount for withdrawal shall be no more than 50% of the credit limit.
Overdrawing interest is collected from account day to repayment at the daily interest rate of 0.5‰.