Can I Write This Off?

Can I write off online payment gateway fees?

TL;DR

Yes, online payment gateway fees are generally deductible as a business expense.

Detailed Answer

Online payment gateway fees can be deducted as a business expense if they are ordinary and necessary for your trade or business. These fees are considered part of the cost of doing business, similar to other merchant fees. For example, if you run an e-commerce store and use a service like PayPal or Stripe to process payments, the fees charged by these services can be deducted. However, if the fees are incurred for personal transactions, they are not deductible.

Where to Put It on the Tax Form

Schedule C (Form 1040), Line 27a for sole proprietors or as a business expense on the applicable form for other business structures.

Real World Example

A freelance graphic designer uses PayPal to receive payments from clients. The fees PayPal charges for each transaction can be deducted as a business expense on the designer's tax return.

Calculation Required

A calculation is required for this deduction.

To calculate the deductible amount, sum all the fees charged by the payment gateway over the tax year. Ensure these are only for business transactions.

Audit Risk & Documentation Tips

Keep detailed records of all transactions processed through the payment gateway, including invoices and receipts that correspond to the fees. Maintain statements from the payment gateway showing the fees charged. This documentation will help substantiate the deduction in case of an audit.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

E-commerceFreelancersSmall BusinessRetailers

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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 7, 2025

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