Is freight-in on inventory part iii line 39 or line 18?

Postage and courier charges to send orders out to customers are an operating expense, commonly office expense on line 18, and are deducted when incurred rather than when the goods sell.

Is freight-in on inventory part iii line 39 or part iii line 36?

Some filers add inbound freight straight into the line 36 purchases figure instead of line 39, which is acceptable as long as it appears once and the method stays the same each year.

Where does freight on inventory go? Part III line 39

Short answer Part III line 39 Part III line 39, other costs

Freight-in on inventory belongs on Part III line 39, part iii line 39, other costs.

Why part iii line 39

Shipping you pay to get goods into your hands is part of what those goods cost, not a separate expense, so it goes into Part III as other costs on line 39 and reaches the return through cost of goods sold. Customs duties, import fees and inbound handling follow the same route. Outbound shipping is the opposite: postage and courier charges to send a sold order to a customer are an operating cost of this year and never enter Part III, which is the distinction most sellers get backwards.

Log it once, with the line already on it. Type an expense in plain words in ClaryBook and it is filed with a date, vendor, amount and what it was for, so the number your preparer needs for freight-in on inventory is already written down.

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What freight-in on inventory is confused with

Line 18, office expense: Postage and courier charges to send orders out to customers are an operating expense, commonly office expense on line 18, and are deducted when incurred rather than when the goods sell.
Part III line 36, part iii line 36, purchases less personal use: Some filers add inbound freight straight into the line 36 purchases figure instead of line 39, which is acceptable as long as it appears once and the method stays the same each year.
Line 22, supplies: Boxes, mailers and tape used to pack outgoing orders are supplies or office expense, not inventory cost, since they are consumed shipping rather than acquiring.

Examples that belong on part iii line 39

$420 ocean freight on a container of goods from a supplier
$95 courier charge on a restock from a wholesaler
$260 customs duty on imported stock
$38 inbound handling fee on a pallet delivery
$1,100 of outbound postage to customers: an operating expense, not line 39

What does not belong here

Outbound shipping to customers, which is an expense of the year, not a cost of inventory.
Packing materials for outgoing orders.
Freight on a machine you bought, which is added to the machine's depreciable cost instead.
Deducting inbound freight in full while the goods it carried are still unsold at year end.

What to keep

Keep the carrier invoices and customs paperwork matched to the purchase they relate to. Matching freight to a specific shipment is what lets you leave the right amount in ending inventory.

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.

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