PayPal fees belongs on Line 10, commissions and fees.
Why line 10
A PayPal or Venmo business transaction fee is the price of accepting the payment, so it sits on line 10 with other selling fees. PayPal deducts it before the money lands, so report the full invoice amount in income and the fee as the expense. Personal transfers between friends are not business activity and do not belong on Schedule C at all. Itemising card fees on line 27a instead is a defensible alternative convention, as long as the fee is only deducted once.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so PayPal fees lands on Line 10 without you sorting it.
Start for freeWhat PayPal fees is confused with
- Line 27a, other expenses
- Fees charged per transaction belong on line 10, while a flat monthly account or merchant service charge is normally itemised on line 27a.
- Line 16b, interest, other
- The fixed fee on a PayPal Working Capital advance behaves like interest, so it goes on line 16b, not with selling fees.
Examples that belong on line 10
- 2.99 percent plus a fixed fee on a 500 dollar goods and services invoice
- A cross-border fee on a payment from a client in Germany
- A Venmo business profile fee of 1.9 percent plus 10 cents
- PayPal's currency conversion spread on a euro payment
- A 20 dollar dispute fee after a buyer complaint
What does not belong here
- Friends and family transfers sent for personal reasons
- Reporting the 1099-K gross figure as both income and an expense
- Repaying the principal of a PayPal Working Capital advance, which is never deductible
- The cost of goods you happened to buy with PayPal, which is categorised by what you bought
What to keep
Keep the PayPal annual financial summary, which lists fees separately from gross payments received, and reconcile it to the 1099-K before you file.
Other expenses on line 10
| Expense | Line |
|---|---|
| a real estate commission split | Schedule C, Line 10 |
| Amazon seller fees | Schedule C, Line 10 |
| App Store and Google Play commission | Schedule C, Line 10 |
| Etsy fees | Schedule C, Line 10 |
| pay-per-lead fees from Thumbtack, Angi or Yelp | Schedule C, Line 10 |
| referral fees you pay | Schedule C, Line 10 |
| sales commissions you pay | Schedule C, Line 10 |
| Shopify transaction fees | Schedule C, Line 10 |
| Square fees | Schedule C, Line 10 |
| Stripe processing fees | Schedule C, Line 10 |
| Upwork and Fiverr platform fees | Schedule C, Line 10 |
Related lookups
Sources
This page explains how Schedule C lines work. It is general information, not tax advice for your situation. If an expense is large or the answer turns on a fact about your business, confirm it with your tax preparer.
Looking for a different expense? The full Schedule C line lookup has every line from 8 to 27 with the expenses that belong on each, and Schedule C expense categories walks the whole form in order.
Stop looking up lines one at a time. ClaryBook totals your year into an IRS Schedule C worksheet in form order, Part I and Part II line by line, so PayPal fees lands on Line 10 without you sorting it.
Start for free