Can I Write This Off?

Can I write off PayPal or Stripe fees?

TL;DR

Yes, PayPal or Stripe fees can generally be written off as a business expense.

Detailed Answer

PayPal or Stripe fees are considered ordinary and necessary expenses incurred in the course of running a business. These fees are deductible as they are directly related to the processing of payments for goods or services provided by the business. For example, if you sell products online and use PayPal or Stripe to process payments, the fees charged by these platforms can be deducted as a business expense. However, if the fees are related to 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 relevant line for other business entities.

Real World Example

A freelance graphic designer uses PayPal to receive payments from clients. Throughout the year, PayPal charges a total of $500 in transaction fees. The designer can deduct this $500 as a business expense on their Schedule C.

Calculation Required

A calculation is required for this deduction.

To calculate the deductible amount, sum all the transaction fees charged by PayPal or Stripe for business-related transactions over the tax year.

Audit Risk & Documentation Tips

Maintain detailed records of all transactions processed through PayPal or Stripe, including invoices and receipts that show the business purpose. Keep monthly statements from these platforms to substantiate the fees claimed as deductions. This documentation will be crucial in case of an audit.

IRS Reference

IRS Publication 535, Business Expenses

Relevant Industries

FreelancersSmall BusinessE-commerceConsultants

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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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