Square fees belongs on Line 10, commissions and fees.
Why line 10
Square's per-swipe and per-invoice percentage is a cost of collecting revenue, which the Schedule C instructions treat as a commission or fee on line 10. Square settles net, so put the gross ticket on line 1 and the fee here rather than reporting only what hit the bank. Hardware and monthly software plans are separate expenses and should not be mixed into the fee total. Preparers who prefer to list all card fees on line 27a as merchant fees are also within normal practice; consistency is what gets tested, not the label.
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 Square fees lands on Line 10 without you sorting it.
Start for freeWhat Square fees is confused with
- Line 22, supplies
- The percentage Square keeps is line 10, while a Reader, stand or terminal you bought is tangible property, expensed on line 22 if minor or capitalised on line 13 if not.
- Line 18, office expense
- A monthly Square Appointments or Restaurants plan is software, line 18, because you pay it whether or not you make a sale.
- Line 16b, interest, other
- The fixed fee on a Square Loan is interest on line 16b, not a processing fee.
Examples that belong on line 10
- 2.6 percent plus 10 cents on a 60 dollar in-person haircut
- 3.5 percent plus 15 cents on a manually keyed card number
- Square Invoices fee of 3.3 percent plus 30 cents on a 900 dollar job
- A 1.5 percent instant transfer fee
- 2.9 percent plus 30 cents on an online checkout order
What does not belong here
- Repaying Square Loan principal, where only the loan fee is deductible
- The monthly plan fee for Square software, which is line 18
- A terminal or Reader purchase, which is equipment rather than a fee
- Tips passed through to employees, which run through payroll on line 26
What to keep
Square's annual sales summary separates gross sales, fees and net deposits; keep the PDF with the 1099-K and tie the fee total to line 10.
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 |
| PayPal fees | 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 |
| Stripe processing fees | Schedule C, Line 10 |
| Upwork and Fiverr platform fees | Schedule C, Line 10 |
Related lookups
- Where do job materials go on Schedule C?
- Where does printer ink go on Schedule C?
- Where does car loan interest go on Schedule C?
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 Square fees lands on Line 10 without you sorting it.
Start for free