Are Shipping Charges for My Business Tax Deductible?

Shipping costs can offset income and reduce your tax bill.
Shipping costs can offset income and reduce your tax bill. (Image: Tay Jnr/Digital Vision/Getty Images)

Shipping costs are considered a necessary business expense and therefore can be subtracted from your income to determine your taxable income, according to Internal Revenue Service guidelines. A sole proprietor would do so on Schedule C and include it with his Form 1040. Keep records of shipping expenses in case the IRS requests clarification later.

Document the Costs

Because the IRS taxes a business on gross profits rather than net profits, documenting expenses is critical. While there isn’t any specific entry for shipping on the Schedule C, it can be cited on line 27A as “Other Expenses” along with the rest of your expenses that don’t fit neatly into any other category. Document your specific costs on Part V of the Schedule C. In addition, shipping supplies and postage can be deducted on line 18 under “Office Expense.” If your business is too big to use a Schedule C to file, you’ll have to include the information as specified by the relevant tax form -- Form 1120S for an S corporation and Form 1120 for a C corporation -- but the idea remains the same. As long as the shipping costs relate to your business operations, they can be used to offset business income.

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