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Where do I deduct merchant proccessing fees on schedule c?

Customer Question
These fees amount to about...
These fees amount to about 1.5% of my gross receipts
Submitted: 10 years ago.Category: Tax
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Answered in 2 hours by:
4/9/2007
Tax Professional: WebTaxMan, Tax Accountant replied 10 years ago
WebTaxMan
WebTaxMan, Tax Accountant
Category: Tax
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Experience: 20+ Years experience-CPAs & My Own Business/IRS Authorized e-file Provider/CA Tax Education Council
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Hi Mindy,

I have a merchant account, and also use schedule C. Line 10 on schedule C (commissions and fees) is where I put it. You can deduct these under sales returns and allowances too. Some do that, Either way is fine. Good luck.

Should you require further clarification, please never hesitate to ask. It would be my pleasure to clarify the answer to your question. My goal is your 100% satisfaction with all questions I answer.

Regards,

Mike

WebTaxMan
WebTaxMan, Tax Accountant
Category: Tax
Satisfied Customers: 922
Experience: 20+ Years experience-CPAs & My Own Business/IRS Authorized e-file Provider/CA Tax Education Council
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Customer reply replied 10 years ago
Relist: I still need help.
How does this deduction work? Dollar for dollar or do I just lose some of the cost of the merchant discount fee?
Tax Professional: WebTaxMan, Tax Accountant replied 10 years ago
Hi Mindy,

Merchant fees are cost incurred by you. They are dollar for dollar deductible. Your merchant should give you a report of what was paid by you. It's taken from you before you get your proceeds from the bank/merchant. If you are reporting only the net proceeds, then you are not counting the merchant fees to begin with, and thus you would not deduct them.

However, the proper way is to report your gross sales (also shown on your merchant account statement) and then show the deduction for the merchant account fees where I suggested. Let me know if you still need help.


Should you require further clarification, please never hesitate to ask. It would be my pleasure to clarify the answer to your question. My goal is your 100% satisfaction with all questions I answer.

Regards,

Mike

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