What Postage Expenses Are Tax Deductible?
Lower your business's taxable income by correctly accounting for postage and shipping costs as ordinary and necessary business expenses.
What Qualifies as a Deductible Postage Expense
For a postage expense to be tax-deductible, it must meet the Internal Revenue Service (IRS) standard of being an “ordinary and necessary” business expense. An ordinary expense is common in your trade or business, while a necessary expense is helpful and appropriate. The cost must be directly related to your business operations and not for personal use.
This standard covers a range of mailing and shipping costs. You can deduct the cost of stamps, fees from private delivery services like FedEx and UPS, and charges from the U.S. Postal Service. It also includes postage meter rental fees, funds added for postage, and shipping insurance purchased to protect goods in transit.
Supplies like boxes, envelopes, and packing materials are also part of the overall cost of shipping but are typically categorized and deducted as office supplies. These expenses must be for business activities, such as mailing invoices to clients, shipping products to customers, or sending out marketing materials.
Postage expenses are not deductible if they are reimbursed. For example, if you charge a client for shipping and include that cost in the invoice, the expense cannot be claimed as a deduction.
Required Documentation for Postage Expenses
To claim deductions for postage, you must keep records to prove the expenses were for business purposes. The IRS requires documentation that substantiates the amount, date, and business nature of each expense, which is necessary to validate your claims in an audit.
Documents you should retain include receipts from the post office, invoices and shipping statements from private carriers, and rental agreements or refill statements for postage meters. Bank and credit card statements that clearly itemize these transactions can also serve as supporting evidence.
It is important to separate business mailing costs from personal ones. If you use a single account for both, maintain a detailed log to distinguish between the expenditures. A simpler method is to use a dedicated business bank account or credit card for all postage and shipping purchases, which creates a clear record.
How to Report Postage Expenses
After calculating your total deductible postage expenses for the year, you must report the amount on the correct tax form for your business structure. You do not need to submit receipts with your return, but you must have them available if the IRS requests them.
For sole proprietors and single-member LLCs, these costs are reported on Schedule C (Form 1040). Postage is commonly included under “Office expenses” on Line 18. If postage is a significant expense for your business, you can list it separately under “Other expenses” on Line 27a.
Corporations and partnerships report these expenses on their respective tax forms. C corporations use Form 1120 and S corporations use Form 1120-S, typically listing postage under “Other deductions.” Partnerships use Form 1065, where postage can also be included as an “Other deduction.”