Are Bank Fees Tax Deductible?

Quick Answer: ✅ Yes — bank fees on your business accounts are 100% deductible as ordinary business expenses. Monthly maintenance fees, wire fees, overdraft charges, check-printing fees — if it's a fee from your business bank account, it's deductible.

The Short Answer

Every fee your bank charges on your business account is a deductible business expense. This includes monthly service charges, per-transaction fees, wire transfer fees, ATM fees, check-printing charges, and even overdraft fees. If you use a separate business bank account (which you should), this is straightforward — every bank fee on that account is deductible.

IRS Rules for Deducting Bank Fees

Bank fees qualify under the general rule for business expenses:

1. Ordinary and necessary — Bank fees are a normal and expected cost of operating a business. Having a bank account to receive payments and pay bills is essential.
2. Business use — The fees must be from a business account or incurred for business purposes. Personal checking account fees are not deductible (unless you can separate the business portion — messy, use a business account).

Source: IRS Publication 535 — Business Expenses

What Counts

✅ Deductible Bank Fees:

• Monthly account maintenance/service fees
• Per-transaction fees
• Wire transfer fees (incoming and outgoing)
• ACH transfer fees
• Check-printing and check-ordering fees
• ATM fees for business withdrawals
• Overdraft fees (yes, even these)
• Stop-payment fees
• Returned check fees
• Statement/record fees
• Safe deposit box rental (if used for business documents)
• Business credit card annual fees
• Merchant account fees (separate from processing fees)

❌ Not Deductible:

• Fees on personal bank accounts (unless a clear business portion can be separated)
• Penalties for illegal activity
• Fees related to personal investments held in a business account

How Much Can You Deduct?

100% of business bank fees are deductible.

Example: A freelancer's annual bank fees:

• Monthly maintenance ($12/month × 12): $144
• Wire transfers (6 × $25): $150
• Check printing: $30
• ATM fees ($3 × 15 withdrawals): $45
• Business credit card annual fee: $95
• Overdraft fee (1 occurrence): $35
• Total deduction: $499

It's not a huge deduction individually, but combined with other financial fees (processing, software, accounting), it adds up.

How to Categorize in QuickBooks

• QBO Category: "Bank Charges" or "Bank Fees" (under Expenses)
• Schedule C Line: Line 27a — Other Expenses (list as "Bank Fees" or "Bank Service Charges")
• Tip: QBO often auto-imports bank fees from connected accounts. Check that they're categorized correctly — they sometimes get lumped into "Uncategorized Expenses" or misclassified as transfers.

Common Mistakes to Avoid

1. Not having a separate business bank account — If you're using a personal account for business, separating bank fees becomes complicated. Open a dedicated business checking account — it makes this deduction (and all your bookkeeping) clean.
2. Missing auto-imported fees — When QBO imports transactions, bank fees often come in with vague descriptions like "SERVICE CHARGE" or "MONTHLY FEE." Make sure you're categorizing them, not ignoring them.
3. Forgetting credit card annual fees — Your business credit card's annual fee is deductible. If you use a personal credit card partially for business, only the business portion of the annual fee is deductible (another reason to have a dedicated business card).
4. Overlooking safe deposit box fees — If you rent a safe deposit box to store business documents, contracts, or financial records, the rental fee is deductible.

Record-Keeping Requirements

• Monthly bank statements (these show all fees automatically)
• Credit card statements showing annual fees
• Wire transfer confirmations
• No separate receipts needed — your bank statements ARE your receipts

Who Can Deduct Bank Fees?

Missing deductions because your books are behind? Accounting Ketchup catches up your QuickBooks in 3–7 days — starting at $69/month. Get your price →