Most bank fees are not deductible, but some are if you use the account for business

Bank fees—monthly maintenance charges, overdraft fees, wire transfer fees—are generally not deductible on your personal tax return. The IRS treats them as personal expenses, the same way it treats groceries or gas. However, if you use a bank account for business purposes, fees tied directly to that account may be deductible as a business expense on Schedule C (if you're self-employed) or on your business tax return.

The key distinction is business use versus personal use. A checking account you use to pay household bills is personal. A separate account you maintain specifically for your freelance work, rental property, or small business is business. Fees on the business account can reduce your taxable business income.

The IRS does not allow you to deduct fees on a personal account even if you occasionally deposit a business check into it. The account itself has to be set up and used primarily for business.

Key Takeaways

  • Bank fees on personal accounts are never deductible, regardless of the reason you were charged.
  • Fees on a business bank account—one used exclusively or primarily for business—may be deductible as a business expense.
  • You must keep records showing the fee was charged to a business account and what the account was used for.
  • Investment account fees, including advisory fees and custodial fees, have different rules and may be deductible under specific circumstances.

Which bank fees might be deductible if the account is for business

If you have a separate business bank account, the following fees may be deductible:

  • Monthly maintenance or service fees charged by the bank to keep the account open.
  • Wire transfer fees when you transfer business funds.
  • Check printing fees for business checks.
  • ACH transfer fees for electronic business payments.
  • Overdraft fees on the business account (though this is less common to claim).
  • Merchant processing fees if you accept credit cards for your business.

The rule is straightforward: the fee must be tied to the business account and must be a cost of operating that account for business purposes. A fee charged to a personal account does not become deductible just because you used the money for business.

How to claim bank fees on your business tax return

If you are self-employed and file Schedule C, bank fees go on line 27 under "Other Expenses." You do not itemize each individual fee; instead, you add them up for the year and enter the total. Keep your bank statements as proof.

If you operate as an LLC, S-corporation, or C-corporation, bank fees are typically deducted on the business return itself, not your personal return. Your accountant or tax software will direct you to the correct line.

You do not need to list the bank's name or account number on your return. The IRS straightforward wants to see that the expense was ordinary and necessary for your business. Bank fees clearly meet that standard.

Investment account fees and advisory fees

Fees charged by investment accounts, brokerage firms, or financial advisors have historically been deductible as miscellaneous itemized deductions—but only if you itemize deductions on your tax return (rather than taking the standard deduction). This category was largely eliminated for tax years 2018 through 2025 under current tax law.

If you have a brokerage account used for business investing or if you pay an advisor to manage business funds, those fees may still be deductible as a business expense rather than a personal deduction. The distinction matters: business expenses reduce your business income directly, while personal investment fees would have been subject to the miscellaneous deduction rules.

Check with a tax professional about your specific situation, as the rules for investment fees are more complex and depend on how the account is classified and what the money is used for.

What the IRS requires you to keep as proof

The IRS does not require you to attach receipts to your tax return, but you must keep them for your records in case of an audit. For bank fees, your proof is straightforward: your monthly bank statements showing the fee was charged.

If you are audited and the IRS questions whether a bank account was truly used for business, you will need to show:

  • Bank statements showing the account was opened in your business name or clearly labeled for business use.
  • Deposits and withdrawals that show business activity (invoices paid, client payments received, business expenses paid).
  • Any business license, partnership agreement, or other documentation that establishes the business itself.

A mixed-use account—one where you deposit both business and personal income—can still may have access to if you can demonstrate it was primarily used for business. However, it is cleaner and safer to maintain a separate account.

When mixing personal and business accounts creates problems

If you use one account for both personal and business purposes, the IRS may disallow the entire deduction if it cannot determine what portion of the fees relates to business use. This is one reason accountants recommend opening a separate business account even if you are a sole proprietor.

A separate account also makes record-keeping easier at tax time and reduces the risk of an audit challenge. The cost of opening and maintaining a business account is usually small compared to the headache of defending a mixed-use account to the IRS.

If you have already been claiming fees on a mixed account and are concerned about it, you can amend prior returns using Form 1040-X. A tax professional can help you determine whether an amendment makes sense in your situation.

Frequently Asked Questions

Can I deduct ATM fees or overdraft fees on my personal account?

No. ATM fees and overdraft fees on a personal account are personal expenses and not deductible. If the account is used for business, those fees may be deductible, but only if the account itself is a business account.

What if my business account is at the same bank as my personal account?

That is fine. The key is that the accounts are separate and the business account is used for business. Fees on the business account are deductible; fees on the personal account are not.

Do I need to report each individual bank fee, or can I add them all up?

Add them up. On Schedule C, you enter the total of all bank fees for the year on line 27. You do not list each fee separately on your return.

Can I deduct fees if I use a personal account but keep detailed records of business deposits?

Unlikely. The IRS looks at whether the account itself is designated for business use, not just how you use the money. A personal account remains personal even if you deposit business income into it.

What if my bank charged me a fee by mistake and I got it refunded?

Do not deduct a fee you did not actually pay. If the bank reversed the charge, there is no expense to deduct. Only claim fees that actually reduced your account balance.