This article was originally published on Feb. 26, 2016, and was updated on Feb. 27, 2019.
When preparing the Schedule C, you do your best to put everything in the right spot because you want to make sure you put together a correct tax form. However, after filling out most of the form, you still have a couple of items that you don’t know what to do with. How do you handle these “other expenses” — miscellaneous costs that don’t fit into the other categories on the form?
Related: Calculating self-employment taxes
Where to enter other expenses on Schedule C of Form 1040
Fortunately, the IRS has given you a special line for these — Line 27a on the Schedule C is for other expenses. This line shows a total amount, which is detailed on line 48 of the Schedule C.
Other expenses you can include on Schedule C
Let’s take a look at a few of those items you can record on lines 27a and 48.
Did your bank charge you fees to have an account or use the ATM? You can include those costs, plus overdraft fees and charges for getting copies of cleared checks.
Credit card fees
You might have gotten a credit card when you signed up for a business account. You can include the fees associated with the credit card — such as annual fees, cash advance fees and late fees.
However, the interest you pay on credit cards is not deductible.
It’s in your best interests to pay off credit card debt as soon as possible since you get no benefit from carrying a balance and incurring interest charges.
To network and drum up business, you might join the local chamber of commerce, trade associations, and other professional and civic organizations. You can deduct the dues and fees you pay to these organizations as “other expenses.”
You might, from time to time, give gifts to clients or potential clients. These gifts — which cannot exceed $25 in value for each recipient — are deductible. If you give gifts to your employees, list these on line 14.
To keep up with the latest trends in your craft or profession, you might subscribe to different magazines, newsletters and publications. Yes, you can deduct those subscription fees.
In contracts you sign with customers, there may be fines or penalties for lateness or non-performance of duties. You can deduct these penalties and fines.
Sometimes you have to mail items to your customers or to other organizations in the course of doing business. Postage, shipping and delivery fees are deductible as other expenses if they are not included in cost of goods sold.
Check out these additional resources to help out at tax time:
- What you need to know about deducting startup costs
- What you need know about writing off auto expenses
- How to file taxes as a new online seller
The above content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.