Monthly bank fees, wire transfer fees, credit card processing fees (Stripe, Square, PayPal), and merchant account fees are all ordinary and necessary business expenses fully deductible under IRC §162.
Getting the deduction right is not just about whether it is allowed — it is about how you set it up.
Use a dedicated business bank account and business credit card.
Bank statements and merchant processing statements document these fees automatically.
Deduct as bank charges or merchant fees on Schedule C.
Do not mix personal and business accounts -- it makes tracking fees much harder.
Review monthly statements for all fees -- many business owners miss merchant processing fees which can total thousands per year.
When structured correctly, this deduction can significantly reduce your taxable income.
Here is how this deduction typically works in real situations:
A freelancer pays 2.9% Stripe fees on $100,000 in revenue = $2,900/year.
An LLC pays $500/month in Square processing fees.
N/A -- bank fees are straightforwardly deductible.
Key Takeaway: The difference between a valid deduction and a denied one usually comes down to documentation, usage percentage, and proper structuring. The same expense can be fully deductible, partially deductible, or not deductible at all — depending on how it is handled.
Yes -- business bank fees and merchant processing fees are fully deductible under IRC §162.
