Key Takeaways

• Credit card fees come from interchange fees, assessment fees, and processor markup.
• Your credit card processor reports your gross card payments on Form 1099-K, not your fees. To find your fee totals, use your processor’s annual or monthly statements (for example, from Stripe or Square).
• Credit card fees are generally tax deductible when they’re ordinary and necessary business expenses.
• Fees on a card you use only for your practice, like annual fees, are generally deductible too. If you mix personal and business charges, you’ll need to allocate.

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When your therapy practice accepts credit card payments, your clients may have an easier time paying for their sessions. That improves your cash flow and ensures you can keep providing clients with regular treatment, but it comes at a cost.

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Banks, payment processors, and credit card companies charge you for the privilege of accepting credit card payments, and those fees can add up. Good news, though: Most—if not all—of those fees are tax deductible.

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Here’s how to deduct credit card processing fees on your tax return and reduce your therapy practice’s tax burden.

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You’re not alone if tax paperwork feels like a lot. In Heard’s 2026 Financial State of Private Practice Report, 53.6% of therapists said understanding taxes and quarterly payments is one of their biggest business headaches (n=1,630), and 56.3% named taxes, accounting, and financial software or support among their most costly business expenses (n=1,671).

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Are credit card payment processing fees tax deductible?

Generally, yes. Credit card processing fees are a cost of doing business, and they’re deductible when they’re ordinary and necessary expenses for your practice. The IRS describes an ordinary expense as one that’s common and accepted in your field, and a necessary expense as one that’s helpful and appropriate for your business (see IRS Publication 334).

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So long as you accept credit cards, debit cards, digital wallets, and most other forms of electronic payment, you should be prepared to pay processing fees (sometimes called payment processing fees or merchant fees).

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Processing fees break down into three categories:

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• Interchange fees are charged by the banks issuing credit and debit cards, and set by card networks. They’re non-negotiable, and typically make up the majority of the fees you pay every time you accept a card payment.

• Assessment fees are charged by card networks. Like interchange fees, they’re typically non-negotiable, but they make up the smaller portion of the total fees you must pay.

• Processor markup is charged by the payment processor, typically the company that has provided you with a card terminal for accepting payments. Often, this fee is negotiable, and it can vary considerably between different processors.

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You can also expect to pay additional fees for chargeback processing, PCI compliance and other operations. The amount of these fees varies according to the card processor and the operation in question. 

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If you’re still deciding how to accept credit card payments, it’s worth comparing processors’ fees as well as their features.

Are Stripe fees tax deductible for therapists?

The fees you pay to accept Stripe payments are, like other credit card processing fees, tax deductible. They’re reported on the same part of your tax return as other processing fees. More on that shortly.

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Where to find your Stripe fee totals. Stripe typically takes its fees out before paying you, so the deposits that land in your bank account are net amounts, not what your clients actually paid. Instead, download a report from your Stripe Dashboard for the full calendar year. Stripe offers a Fees report that shows the fees charged by Stripe, card networks, and partners, as well as a Balance report that works like a bank statement. Use the fee total as your deductible amount, and confirm it matches what’s in your books.

Are Square fees tax deductible for therapists?

If you accept payments via Square, you can deduct the associated fees. You do so on the same part of your tax return where you deduct credit card processing fees. More on that below.

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Where to find your Square fee totals. Like Stripe, Square typically deducts its processing fees before your money reaches your bank account, so your deposits will be lower than your actual sales. Look for your processing fee totals in the reports and transaction exports in your Square Dashboard, or ask Square support for a year-end summary of fees, then compare the total against your bookkeeping.

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How to deduct credit card processing fees on your tax return

If you accept card payments, your payment processor will generally send you a Form 1099-K by January 31st, after the close of the tax year. Processors that handle card payments report no matter how small your total is. A higher reporting threshold applies only to payments made through third-party payment apps and marketplaces.

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Here’s the part that trips people up: Form 1099-K doesn’t list your fees. It reports the gross amount of your card payments, before fees, refunds, and other adjustments are subtracted. To find out how much you paid in fees, use your processor’s annual or monthly statements and reports (Stripe, Square, and others provide these), then report that total as a deductible expense on your tax return.

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A common mistake is to book the net deposits that hit your bank account as your income. Because processors take their fees out first, net deposits understate both your income and your fees. Instead, record your full gross receipts as income and deduct the fees separately as an expense. Your 1099-K total may not match your actual income exactly either, so reconcile it against your own records.

Where to deduct credit card processing fees on your tax return

If your therapy practice is a sole proprietorship or an LLC filing as a sole proprietorship, you report credit card processing fees as a deductible expense on Schedule C of Form 1040.

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There’s no line labeled for credit card fees. Many preparers report them on Schedule C line 10 (Commissions and fees) or list the total in Part V (Other Expenses), labeling the item “Credit card processing fees.” Ask your accountant which they use.

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If your therapy practice is an S corporation, you list your deductible expenses on Form 1120-S. There’s no line labeled for credit card fees, and no Part V like the one on Schedule C. Credit card fees generally go in “Other deductions” (line 20 on the 2025 form), with an attached statement listing the total credit card fees for the year.

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If your practice is a partnership or multi-member LLC, you file Form 1065. Credit card fees generally go in “Other deductions” (line 21 on the 2025 form), again with an attached statement.

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Where to deduct credit card fees by entity type

Line numbers shown are from the 2025 tax forms. They can shift from year to year, so check the current form or ask your accountant.

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Are business credit card fees tax deductible?

Generally, yes, when the card is used for your practice. If you have a business credit card you use exclusively for business-related transactions, you can also deduct fees associated with the card. That includes annual fees, balance transfer fees, foreign transaction fees, and any convenience fees you’re charged in the course of using the card.

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Annual and membership fees. A card’s annual or membership fee is generally deductible when the card is used only for your practice. If you also use the card for personal purchases, only the business share of the fee is deductible, so you’ll need to allocate it.

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Card interest. Interest on charges for your practice is generally deductible as business interest. The IRS says you can’t deduct interest on personal loans on Schedule C, and that when a loan is part business and part personal, you must divide the interest between the two. The same logic generally applies to a card you use for both, so ask your accountant how to allocate. If you’re a sole proprietor, business interest from a card is typically reported on Schedule C line 16b (Interest, Other).

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Annual, balance transfer, foreign transaction, and similar fees go in the same place as your processing fees (see the table above): for example, Part V of Schedule C for sole proprietorships, or an attached statement with Form 1120-S (S corps) or Form 1065 (partnerships).

Best practices for deducting credit card fees

Whether you’re deducting occasional fees you pay your business credit card provider, or deducting payment fees incurred when you accept credit cards from clients, here are a few guidelines to follow:

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• Maintain accurate, organized records. Form 1099-K shows your gross payments, not your fees, so hang on to your processor’s monthly and annual statements, plus copies—ideally digital ones—of all your transaction receipts. This protects you if a statement or form gets lost in the mail, and it helps you track credit card fees as an expense in your business books.

• Keep business and personal expenses separate. This mainly applies if you’re planning to deduct usage fees for your business credit card. Personal credit card fees are not tax deductible, and mixing personal charges with business ones makes your deductions harder to support. If you start using your business credit card like a personal credit card and claiming the fees on your tax return, you could run into trouble with the IRS.

• Keep up to date with changes to tax laws. Paying taxes is an inevitable part of life, but that doesn’t mean taxes are static. The eligibility of some deductions, and the way certain tax deductions are recorded and reported, may change from one year to the next. Keep track by staying up to date with IRS news.

• Get help from a tax professional. It’s always wise to get advice from a CPA, tax attorney, or other professional before claiming a new expense on your tax return. A tax professional can also help you plan future tax moves and stay up to date with changes to the law.

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Credit card fee deduction FAQs

Are credit card processing fees tax deductible?

Generally, yes. Credit card processing fees are a cost of accepting payments, and they’re deductible when they’re ordinary and necessary expenses for your practice. Sole proprietors typically report them on Schedule C (line 10 or Part V). Ask your accountant which approach they use.

Are payment processing fees tax deductible?

Generally, yes. Fees charged by payment processors like Stripe and Square are deductible on the same basis as other credit card processing fees. Because these processors typically take their fees out before paying you, make sure you report your full gross receipts as income and deduct the fees separately.

Are business credit card fees tax deductible?

Generally, yes, if the card is used for your practice. Annual fees, balance transfer fees, foreign transaction fees, and similar fees on a card you use only for business can be deducted. If you use the card for both business and personal purchases, only the business share is deductible.

Are credit card membership fees tax deductible?

A membership or annual fee on a card you use only for business is generally deductible. A fee on a personal card isn’t, and on a mixed-use card you’ll need to allocate the fee between business and personal use. A tax professional can help you decide how to split it.

Does Form 1099-K show my credit card fees?

No. Form 1099-K reports the gross amount of your card payments before fees are subtracted. Get your fee totals from your payment processor’s annual or monthly statements and reports, then deduct them as a business expense.

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First time claiming tax deductions? Check out our complete guide to tax deductions for therapists.

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Summary

• Credit card fees you’re charged by payment providers in the course of doing business are generally deductible when they’re ordinary and necessary business expenses
• Form 1099-K reports your gross card payments, not your fees. Use your processor’s statements to find your fee totals, and report your full gross receipts as income rather than net deposits
• Sole proprietors typically deduct credit card fees on Schedule C of Form 1040 (line 10 or Part V). S corps and partnerships generally use “Other deductions” on Form 1120-S or Form 1065 with an attached statement
• Interchange and assessment fees are fixed, but you may be able to negotiate a lower processor markup with your credit card processor
• Keep records of all credit card fees you deduct—you’ll need them to back up your deductions in the event you are audited by the IRS
• Mixing personal and business charges on a single credit card makes deductions harder to support. Personal charges and their fees aren’t deductible, and mixed-use cards require allocation, so use a separate card exclusively for business expenses

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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Bryce Warnes is a West Coast writer specializing in small business finances.

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