Can you write off merchant processing fees?

Yes, you can write off merchant processing fees. The IRS generally considers fees paid to credit card processors, banks, and payment gateways (like Stripe, Square, or PayPal) to be "ordinary and necessary" business expenses, making them fully tax-deductible against your business income.

How to claim them:

• Sole Proprietors and Single-Member LLCs: These fees are typically deducted on Schedule C (Form 1040). Many accountants recommend categorizing them under "Commissions and fees" (Line 10) or "Other expenses" (Part V).
• Partnerships and Corporations: These entities will deduct them on their respective corporate tax returns (like Form 1065, 1120, or 1120-S) under general deductions or bank fees.

What else is included?
In addition to the standard per-transaction fees (e.g., 2.9% + $0.30), you can also deduct monthly statement fees, PCI compliance fees, gateway fees, and equipment rental fees associated with processing payments.

Make sure to keep accurate records or download the annual fee summaries from your merchant dashboard, as your gross sales reported on a 1099-K will often include the total revenue before these fees were deducted.