Key takeaways
- Online Sellers file as 1099 / self-employed, so business expenses are deductible on Schedule C.
- Deductions cut both income tax and the 15.3% self-employment tax.
- The biggest write-offs for online sellers are listed below, with what each covers.
- You need receipts and a mileage log to claim them.
Tax write-offs for online sellers
Here are the deductions online sellers most commonly claim. Each one lowers your net profit, and therefore your tax:
| Deduction | What it covers |
|---|---|
| Cost of goods sold | What you paid for inventory or materials for items sold. |
| Shipping and postage | Labels, postage, and carrier costs to fulfill orders. |
| Packaging supplies | Boxes, mailers, tape, labels, and packing materials. |
| Platform and seller fees | Etsy, eBay, Amazon, and Shopify fees and subscriptions. |
| Payment processing fees | PayPal, Stripe, and card-processing charges. |
| Home office and storage | A dedicated work or inventory-storage space in your home. |
| Photography equipment | Camera, lighting, and props for product photos. |
| Mileage | Post office, supply, and sourcing runs at the IRS rate. |
| Advertising | Promoted listings, social ads, and marketing. |
| Software and tools | Listing, inventory, accounting, and design tools. |
How cost of goods sold (COGS) works for sellers
The money you spend to buy or make the products you sell is deducted as cost of goods sold, not as a regular expense. You track your inventory purchases and materials, and deduct the cost of the items actually sold during the year. Keeping clean records of what you bought, made, and sold is the core of a seller's bookkeeping and often the largest deduction.
Shipping, packaging, and platform fees
Postage and shipping labels, boxes, mailers, tape, and packing materials are fully deductible, as are the fees the platforms and processors take, Etsy, eBay, and Amazon seller fees, plus PayPal and Stripe processing. These small, frequent costs add up to a large deduction across a year of orders, so capture them as they happen.
Turn online sellers deductions into tax savings
Every dollar you deduct lowers both your income tax and your 15.3 percent self-employment tax, so consistently tracking the write-offs above is what turns the list into real money. You can only deduct what you can prove, so capture receipts and miles as they happen.
See what these deductions save you with our free calculators, then let NeoReceipt make sure you capture every one.