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Can freelancers deduct are credit card processing fees tax deductible?

TL;DR

Yes, credit card processing fees are generally tax deductible for freelancers as a business expense, provided they are directly related to business transactions.

Detailed Answer

Credit card processing fees can be deducted as a business expense on your tax return if they are incurred as part of your business operations. This includes fees charged by credit card companies or payment processors like PayPal or Stripe for processing payments from clients. However, personal credit card processing fees are not deductible. For example, if a freelance graphic designer incurs a 3% fee on a $1,000 payment from a client, the $30 fee is deductible. It's important to ensure that these fees are clearly documented as business-related expenses.

Where to Put It on the Tax Form

Schedule C, Line 27a

Real World Example

A freelance web developer receives payments through PayPal and incurs a 2.9% processing fee on each transaction. For a $2,000 project, the fee amounts to $58. The developer can deduct this $58 as a business expense on Schedule C, Line 27a.

Audit Risk & Documentation Tips

Audit risk is generally low for this deduction if properly documented. Keep detailed records of all transactions, including invoices and statements from payment processors showing the fees charged. Maintain a clear separation between business and personal expenses by using a dedicated business account for transactions.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersConsultantsE-commerceIndependent Contractors

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 25, 2025

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