Bank charges are deductible only if the account is used for business, and only on your business tax return
If you have a personal checking or savings account, bank fees are not deductible on your individual tax return. The IRS does not allow you to deduct fees for accounts that hold personal money.
If you have a separate business bank account — one you use only for your business — then fees on that account may be deductible as a business expense. This includes monthly maintenance fees, overdraft fees, wire transfer fees, and fees for checks or deposit slips. The key is that the account must be genuinely separate from your personal finances and used only for business purposes.
Self-employed people and small business owners often overlook this deduction because the fees are small. But they add up: if you pay $15 a month in fees, that is $180 a year you can deduct, which reduces your taxable income.
Key Takeaways
- Bank fees on personal accounts cannot be deducted on any tax return.
- Bank fees on a business account are deductible as a business expense if you report business income on Schedule C or another business tax form.
- Deductible fees include monthly maintenance, overdraft charges, wire transfers, and check fees — anything charged by the bank for account services.
- You do not need receipts for bank fees because they appear on your monthly statement, which the bank has on file.
What counts as a business bank account for tax purposes
A business bank account is one you opened in your business name or sole proprietorship name, separate from your personal account. The account should be used only for business transactions: deposits from customers or clients, payments to suppliers, and business expenses.
If you mix personal and business money in the same account, the IRS may question whether fees are truly business-related. Keeping the accounts separate makes it clear to the IRS and to yourself which fees belong to your business.
You do not need to be incorporated or have a formal business structure to have a deductible business account. A sole proprietor — someone who is self-employed and files Schedule C on their personal tax return — can open a business account and deduct the fees.
How to report bank fees on your tax return
If you are self-employed and file Schedule C (Profit or Loss from Business), bank fees go on that form under "Office expense" or "Other expenses," depending on how your tax software or preparer organizes it. The total of all your business expenses reduces your net business income, which is what you pay tax on.
If you own a business structured as an LLC, S-corporation, or C-corporation, bank fees are reported on your business tax return (Form 1120-S, Form 1120, or the equivalent for your state). Your accountant or tax preparer will know where to place them.
You do not file a separate form or attach documentation to your return. The bank fees are straightforward listed as part of your business expenses. The IRS knows the fees exist because your bank reports your account activity, but you do not need to submit receipts unless the IRS asks.
Bank fees that are not deductible
Some charges that look like bank fees are actually not deductible, even on a business account. Interest paid on a business loan is not a bank fee — it is interest expense, which is deductible but reported separately. Penalties for bounced checks or late payments may or may not be deductible depending on why they occurred; if the penalty is for a personal mistake rather than a business cost, the IRS may disallow it.
Fees for personal accounts, even if you use the account partly for business, are not deductible. The account must be in your business name or clearly designated as a business account to the bank.
If you have a business credit card, fees on that card (annual fees, foreign transaction fees) are also deductible business expenses, reported the same way as bank account fees.
Why keeping records matters even though you do not need receipts
You do not have to submit your bank statements with your tax return. However, you should keep them for at least three years in case the IRS asks questions about your deductions. Your bank statements show exactly what fees you paid and when, which is all the documentation you need.
If you use accounting software like QuickBooks or Wave, you can connect your business bank account directly and the fees will be recorded automatically. This creates a clear record and makes it straightforward to total them at tax time.
If the IRS ever audits your return and questions your business expenses, having your bank statements on hand proves that the fees were real and that the account was genuinely used for business.
Frequently Asked Questions
Can I deduct bank fees if I use my personal account for some business income?
No. The account must be separate and used only for business. If you deposit both personal and business money into the same account, the fees are not deductible. Opening a separate business account is inexpensive and solves this problem.
What if my bank charges me a fee for something I did not authorize?
If you dispute the fee and the bank refunds it, there is nothing to deduct. If you do not dispute it and keep the fee, it is deductible on a business account. However, if the fee resulted from your error (like an overdraft you caused), some tax preparers advise against deducting it because it may look like a personal mistake rather than a business cost.
Do I need to list every single bank fee on my tax return?
No. You add up all your bank fees for the year and report the total as one line item under business expenses. Your bank statement shows the total, so you do not have to list each fee separately.
Are ATM fees deductible if I use the ATM for business withdrawals?
Yes, if the ATM is not your bank's ATM and you are charged a fee, and the withdrawal is from a business account. ATM fees charged by your own bank are usually included in your monthly maintenance fee, which is already deductible. Out-of-network ATM fees are deductible business expenses.