Those who used a credit or debit card to pay taxes last year may be eligible for an additional deduction on their 2008 return, the Internal Revenue Service said Tuesday.

In a reversal of a previous position, the IRS said the fees that credit or debit card processors charge on electronic income tax payments will be deductible as a miscellaneous expense.

The fees vary but average 2.5% of the tax payment, the IRS said. Those fees are charged directly by the card payment processor to the taxpayer, because federal law bars the IRS from paying fees associated with the transactions.

Only those who itemize may benefit from the deduction. And the value of miscellaneous deductions, including the card fees and other items such as unreimbursed employee expenses and tax preparation fees, are deductible only to the extent that they exceed 2% of adjusted gross income.

Taxpayers who use a credit or debit card this year must wait to deduct the fees on the tax return due April 15, 2010. Those who used a card to pay taxes last year have until Wednesday to determine whether they are eligible for an additional deduction.

Last year more than 4 million people paid taxes electronically, the IRS said. That figure includes not only those who paid with a credit or debit card, but also those who paid with direct debit from a bank account, which is not generally subject to a fee.

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