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How do I deduct are stripe fees tax deductible on my taxes?

TL;DR

Stripe fees are generally deductible as a business expense, as they are considered ordinary and necessary costs incurred in the course of running a business.

Detailed Answer

Stripe fees can be deducted as a business expense under the category of 'bank fees' or 'merchant fees.' These fees are considered ordinary and necessary expenses for businesses that accept credit card payments. To qualify for deduction, the fees must be directly related to the business's income-generating activities. For example, if a freelance graphic designer uses Stripe to process payments from clients, the fees charged by Stripe are deductible. However, if Stripe is used for personal transactions, those fees are not deductible. It's important to ensure that the fees are not reimbursed by clients or otherwise compensated, as this would negate the deduction.

Where to Put It on the Tax Form

Schedule C, Line 27a (Other expenses) or Line 17 (Legal and professional services), depending on how the business categorizes these fees.

Real World Example

A freelance graphic designer earns $50,000 in a year and pays $1,500 in Stripe fees for processing payments from clients. The designer can deduct the $1,500 as a business expense on Schedule C, reducing taxable income.

Audit Risk & Documentation Tips

The audit risk for deducting Stripe fees is generally low, provided the fees are clearly business-related. Taxpayers should keep detailed records of all transactions processed through Stripe, including invoices and bank statements showing the fees deducted. It's also advisable to maintain a separate bank account for business transactions to clearly distinguish between personal and business expenses.

IRS Reference

IRS Publication 535, Business Expenses; IRC §162.

Relevant Industries

FreelancersE-commerceConsultantsSmall Business Owners

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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 15, 2025

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