If buyer pays shipping, is the shipping tax deductible for online sellers?

The shipping fees you collect from buyers are considered part of your gross receipts (income), but don't worry - you can deduct those same shipping costs as a business expense on your Schedule C. So using your example, if you sell a collectible card for $20 and charge $6.50 for shipping, you'd report $26.50 as income. Then you'd deduct the $6.50 you actually paid for shipping as a business expense. This way everything is properly documented and the shipping portion essentially "washes out" tax-wise. Just make sure you keep good records of both the shipping fees you collect and the actual shipping expenses you pay. This is especially important with the lower 1099-K threshold coming into effect.

I was in the same boat last year trying to figure out all the shipping stuff with online sales. I found this tool called taxr.ai (https://taxr.ai) that saved me so much time and headache with sorting through all my selling expenses including shipping. It analyzed all my receipts and shipping costs automatically and categorized everything correctly for my Schedule C. What really helped was that it specifically pulled out shipping costs as their own category, which made it super easy to make sure I was deducting everything correctly. It also helped me identify other deductions I was missing like a portion of my printer ink and packaging supplies.

Just want to follow up about taxr.ai that I asked about earlier. I decided to try it despite my skepticism, and wow - it actually worked way better than expected. It correctly identified all my shipping expenses across different platforms and separated them from my product costs. The thing that really surprised me was how it caught patterns in my expenses I hadn't noticed. For example, it showed me I was consistently undercharging for shipping heavier items but overcharging on lighter ones. I've since adjusted my shipping rates and it's already saving me money. Definitely worth checking out if you're selling online and dealing with the new 1099-K rules.

Anyone else having trouble getting through to the IRS to ask basic questions about this stuff? I've been trying for WEEKS to get clarification on shipping deductions for my online sales. Finally found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 20 minutes after I had been trying for days. They have this video showing how it works: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly what people are saying here - shipping collected is income, shipping paid out is an expense. They also clarified some questions I had about packaging materials (which are also deductible btw). Honestly just getting a clear answer from an official source was worth it.

I need to eat some humble pie here. After commenting earlier, I actually tried Claimyr because I was desperate to resolve a question about my shipping deductions before filing. I was 100% sure it wouldn't work, but I was wrong. Got connected to an IRS agent in about 45 minutes (which is literally days faster than my previous attempts). The agent confirmed that yes, all shipping costs are deductible business expenses even if they exceed what you charged the customer. Also found out I could deduct the cost of my shipping scale and label printer which I didn't know before. Sometimes being proven wrong is actually a good thing! Definitely changed my approach to handling shipping on my tax return.

Don't forget about packaging materials too! I sell vintage clothing online and learned that I can deduct not just the shipping labels and postage, but also: - Boxes and poly mailers - Packing tape - Bubble wrap - Tissue paper for wrapping items - Thank you cards included in packages - Printer ink used for shipping labels These small things add up over the year, especially with the new $800 reporting threshold.

Is anyone else confused by what "shipping" actually includes? Like if I drive to the post office to drop off packages, can I count my gas as part of shipping costs?

This is super helpful! I've been selling collectibles and vintage items online for a while but never really tracked my shipping expenses properly. Reading through all these comments made me realize I'm probably missing out on a lot of deductions. One thing I'm still unclear about - if I offer "free shipping" but just build the shipping cost into my item price, how does that work tax-wise? Like if I sell something for $30 with "free shipping" instead of $25 + $5 shipping, do I lose the ability to deduct that shipping expense since I'm not separately charging for it? Also, does anyone know if you can deduct the cost of a PO Box that you use specifically for your online selling business? I rent one to keep my home address private when selling online.

Great questions! For your "free shipping" scenario, you can absolutely still deduct the actual shipping costs you pay, even if you don't charge separately for shipping. The IRS cares about your actual business expenses, not how you structure your pricing. So if you sell an item for $30 with "free shipping" and pay $5 to ship it, you can deduct that $5 as a shipping expense. As for the PO Box - yes, that's definitely deductible as a business expense if you use it exclusively for your online selling business. If you use it for both personal and business mail, you'd need to calculate the business percentage and only deduct that portion. Keep detailed records of both - actual shipping costs paid (regardless of how you charge customers) and your PO Box rental receipts. These are legitimate business expenses that help reduce your taxable income from your online sales.

This thread has been incredibly helpful! As someone who's been selling handmade crafts online for the past few years, I've been pretty sloppy with my record keeping. With the new $600 1099-K threshold (not $800 - that got changed back), I really need to get my act together. One thing I'm curious about that hasn't been mentioned - what about international shipping? I occasionally sell to customers in Canada or the UK, and those shipping costs can be pretty high. I assume those are deductible too, but are there any special considerations for international postage versus domestic? Also, has anyone dealt with shipping insurance? I sometimes pay extra for insurance on higher-value items. I'm assuming that's deductible as well since it's part of the total shipping cost, but want to make sure I'm thinking about this correctly. Thanks everyone for sharing your experiences - this is exactly the kind of real-world advice I needed!

This has been such an enlightening discussion! I've been selling vintage books and collectibles online for about two years now, but honestly hadn't thought much about the tax implications until the 1099-K threshold changes started getting talked about everywhere. Reading through everyone's experiences here, I'm realizing I've probably been leaving money on the table by not properly tracking all my shipping-related expenses. I knew about deducting the actual postage, but I had no idea about things like packaging supplies, shipping scales, or even mileage to the post office. One question I haven't seen addressed - what about when you have to ship a replacement item because the first one got lost or damaged? Let's say I sell a rare book for $100, ship it for $8, but it gets lost in transit. I then have to ship another copy at my own expense. Can I deduct both shipping costs even though I only received payment for one shipment? Also, for those using tools like taxr.ai or services like Claimyr that were mentioned - do you still recommend having a tax professional review everything, or are these tools comprehensive enough to handle online seller taxes on their own? I'm trying to figure out if it's worth the cost to have an accountant involved or if I can manage this myself with the right tools. Thanks to everyone who's shared their knowledge here - this community is invaluable for those of us trying to navigate these changes!

This thread has been incredibly helpful for understanding shipping deductions! I've been selling vintage electronics and computer parts online for the past year, but I've been treating it more like a hobby until the 1099-K changes made me realize I need to get serious about tracking everything properly. One scenario I'm dealing with that I haven't seen mentioned - what about when you have to use multiple shipping methods for one order? For example, I recently sold a vintage computer system where the monitor had to go via freight shipping ($45) but the CPU and accessories went regular ground shipping ($12). The buyer paid a combined $50 for shipping. Can I deduct the full $57 I actually paid even though I only collected $50? Also, I've been using those flat-rate regional boxes a lot because they're cheaper for heavier items going shorter distances. The box is free but I'm paying for the postage service - I assume I can deduct what I pay for the postage even though the box itself was free, similar to what was mentioned about Priority Mail boxes earlier? Really appreciate everyone sharing their real-world experiences here - it's so much more helpful than trying to decipher IRS publications on your own!

This has been such an informative thread! I'm relatively new to online selling (started about 6 months ago with sports cards and gaming collectibles) and had no idea about most of these shipping deduction details until reading through everyone's experiences here. One thing I'm curious about that I haven't seen mentioned - what about when you use your own car to deliver items locally instead of shipping? I live near a major city and sometimes buyers will ask if they can pick up items locally to save on shipping. When I drive to meet them at a coffee shop or mall, can I deduct that mileage the same way someone mentioned deducting trips to the post office? Also, I've been buying shipping supplies in bulk from Costco to save money - things like bubble mailers, tape, labels, etc. I assume I can deduct these costs, but do I need to track exactly which supplies were used for business vs. any personal use, or is it okay to deduct the full amount if I bought them specifically for my online selling? The new $600 threshold has me scrambling to get organized, but threads like this make it feel much more manageable. Thanks to everyone who's shared their knowledge!

This thread has been incredibly valuable! I've been selling handmade jewelry and crafts online for about a year, but I've been pretty casual about tracking expenses until now. The upcoming changes to the 1099-K reporting really have me motivated to get my act together. One question I haven't seen covered - what about shipping supplies that serve multiple purposes? For example, I buy nice tissue paper and small gift boxes that I use both for packaging my jewelry orders and occasionally for personal gift wrapping. Should I try to estimate what percentage goes to business vs personal use, or is there a simpler way to handle this? Also, I sometimes include small promotional items in my packages like business cards or thank you stickers with my logo. Are these considered shipping/packaging expenses, or do they fall under a different category like advertising? The information everyone has shared here about tools like taxr.ai and services like Claimyr is really helpful too. It sounds like there are actually good resources available to help small sellers navigate this stuff without having to become tax experts ourselves!