Guide for Freelancers on Platforms
How to Categorize Upwork and Fiverr Fees on Schedule C (2026)
You earned $5,000 on Upwork but only $4,500 hit your bank account. Fiverr took 20% before you ever saw the money. Here's how to report the full amount, deduct those fees, and keep your records straight at tax time.
Key Takeaways
- Freelance platform fees belong on Schedule C Line 10 (Commissions and Fees). Report gross earnings on Line 1, then deduct fees separately.
- Fiverr takes a flat 20% of every order and every tip. Upwork charges a variable service fee (typically around 10%).
- Platforms issue 1099-K forms showing gross earnings before fees. If your Schedule C Line 1 only shows the net amount, the IRS will flag the discrepancy.
- Download your platform transaction history at least quarterly to reconcile gross earnings, fees, and net payouts against bank deposits.
The Core Problem: You Earned More Than You Received
If you freelance on Upwork, Fiverr, or Toptal, your bank deposits don't match what you actually earned. The platform takes its cut before sending you the rest. That creates a gap that confuses a lot of people at tax time.
Say a client pays $5,000 for your work on Upwork. Upwork deducts its service fee (currently a variable rate, often around 10%), and you receive roughly $4,500 in your bank account. But the IRS expects you to report the full $5,000 as income, not $4,500.
The good news: that $500 Upwork kept? It's a deductible business expense. You just need to know where to put it on your Schedule C.
Always Report the Full (Gross) Amount as Income
This is the most important rule: report your gross earnings on Schedule C Line 1, not the net amount that landed in your bank account.
Why? Because the IRS will likely receive a 1099-K from the platform showing the gross amount. If your Schedule C shows $4,500 in income but the 1099 says $5,000, you'll get a notice asking where the missing $500 went.
The math works out the same either way. You report $5,000 in income and deduct $500 in fees, giving you $4,500 in net profit. But reporting it correctly from the start avoids unnecessary IRS correspondence.
Quick example
Client pays for your project: $5,000
Upwork service fee (10%): -$500
Deposited to your bank: $4,500
Schedule C Line 1 (gross income): $5,000
Schedule C Line 10 (commissions & fees): $500
Net result: $4,500 (same as your deposit)
Where Platform Fees Go: Schedule C Line 10
Platform service fees belong on Schedule C, Line 10: Commissions and Fees. This line is specifically for amounts you pay to third parties for services that help you earn income, and that's exactly what Upwork and Fiverr do. They connect you with clients, process payments, and take a percentage for providing that service.
Line 10 covers commissions and fees paid to non-employees, including payments to agents, brokers, and online marketplace platforms. Freelance platform fees fit squarely here.
For a full walkthrough of every line on Schedule C, see our Schedule C expense categories line-by-line guide.
Platform-by-Platform Fee Breakdown
Upwork
Service fee (0% to 15%, variable)
As of 2025, Upwork moved from a flat 10% to a variable fee model ranging from 0% to 15%. The exact rate depends on factors like your skill category, supply and demand, and the specific contract. Most freelancers still pay around 10%. The fee is visible before you accept any offer, and once a contract starts, the rate is locked in. Schedule C Line 10.
Payment processing and withdrawal fees
Upwork may charge fees when you withdraw funds, depending on your payment method. Direct deposit to a U.S. bank is typically free, but wire transfers and other methods carry fees. Schedule C Line 10 or Line 27a (Other expenses).
Connects purchases
You need Connects to submit proposals on Upwork. Free accounts get a limited number each month, but many freelancers buy additional Connects. These are a cost of doing business on the platform. Schedule C Line 10 or Line 27a (Other expenses).
Fiverr
20% service fee on all orders
Fiverr takes a flat 20% of every order, with no tiers or exceptions. If a buyer pays $100 for your gig, you receive $80. This applies to every sale, regardless of volume or history. Schedule C Line 10.
20% fee on tips
Unlike many platforms, Fiverr also takes 20% of any tips your clients leave. A $50 tip means $40 in your pocket and $10 to Fiverr. Schedule C Line 10.
Withdrawal fees
Fiverr may charge fees depending on your withdrawal method. PayPal and bank transfers can carry small processing charges. Schedule C Line 10 or Line 27a (Other expenses).
Toptal
A different model entirely
Toptal works differently from Upwork and Fiverr. Freelancers set their own hourly rate, and Toptal adds a markup (often significant) that the client pays. The freelancer receives their full quoted rate with no visible deduction. Since Toptal doesn't take a fee from the freelancer's side, there's typically nothing to deduct on Line 10 for Toptal's cut. Your gross income and your payout are the same number.
If Toptal does charge you any processing or withdrawal fees, those would still be deductible under Line 10 or Line 27a.
Currency Conversion Fees
If you work with international clients and receive payments in foreign currencies, you'll likely encounter currency conversion fees. Upwork and Fiverr both charge for converting non-USD payments, and your bank or payment processor (PayPal, Payoneer, Wise) may add its own conversion spread on top.
These conversion fees are ordinary and necessary business expenses. You can deduct them on Schedule C Line 27a (Other expenses), described as something like “currency conversion fees” or “foreign exchange fees.” Some freelancers group them with their other platform fees on Line 10. Either approach is reasonable as long as you're consistent and can document the amounts.
One important detail: you must report all income in U.S. dollars. If a client pays you 4,000 euros, convert it to USD using the exchange rate on the date you received the payment (or use an average annual rate if your volume is high and the IRS hasn't objected). The amount that hits your bank account in USD is often the simplest figure to use, and any difference caused by the conversion fee is your deductible expense.
How to Reconcile Bank Deposits with Gross Earnings
This is where freelancers on platforms get tripped up the most. Your bank statement shows one number. Your 1099 shows another. Your platform dashboard might show a third. Here's how to make them all agree.
Step 1: Download your platform's earnings report.
Both Upwork and Fiverr offer transaction history downloads (usually as CSV files). On Upwork, go to Reports, then Transaction History, and filter by your tax year. On Fiverr, check your earnings dashboard for a similar export. These reports show gross earnings, fees deducted, and net payouts for each transaction.
Step 2: Total your gross earnings.
Add up the “gross” or “client paid” column. This is what goes on Schedule C Line 1. It should match (or come close to) the amount on your 1099-K.
Step 3: Total your platform fees.
Add up all service fees, processing fees, and any other deductions the platform took. This total goes on Schedule C Line 10.
Step 4: Verify against your bank statement.
Your gross earnings minus total platform fees should roughly equal the total deposits from that platform in your bank account. There may be small timing differences (a December earning that arrives in January, for example), but the numbers should be close.
If you use Stripe to receive client payments outside of platforms, the reconciliation process is similar. See our guide on reconciling Stripe payouts with expense categories for a detailed walkthrough.
1099-K vs. 1099-NEC: Which One You'll Get
This trips up a lot of freelancers. There are two common 1099 forms, and the one you receive depends on how payments flow.
1099-K (from platforms like Upwork and Fiverr)
When a third-party payment network processes your earnings, they issue a 1099-K. Upwork and Fiverr are payment networks for tax purposes, so they report your gross earnings on a 1099-K. The current reporting threshold is $20,000 and 200 transactions (though this threshold has been under discussion and may change). Even if you don't meet the threshold, you're still required to report all income.
1099-NEC (from direct clients)
If a client pays you directly (not through a platform), they're supposed to send you a 1099-NEC if they paid you $600 or more during the year. Upwork and Fiverr do not issue 1099-NEC forms to freelancers. They use 1099-K because they're the payment processor.
The key takeaway: the 1099-K from Upwork or Fiverr shows gross earnings before fees. That's the number that matches your Schedule C Line 1. The fees you deduct on Line 10 are what bridge the gap between that gross figure and what actually arrived in your bank account.
For more on 1099-K reporting from payment apps, see our guide to 1099-K and payment app taxes.
Record-Keeping Tips for Platform Freelancers
Good records make tax time painless and protect you if the IRS ever asks questions. Here's what to track throughout the year:
Download your transaction history quarterly.
Don't wait until April. Platforms can change their reporting interfaces, and data availability can be limited for older periods. Export your CSV files at least every quarter so you always have a local backup.
Track fees separately from income.
In your bookkeeping (even if it's a simple spreadsheet), keep a column for gross earnings, a column for platform fees, and a column for net payout. This makes filling out Schedule C straightforward.
Save your 1099-K when it arrives.
Compare it against your own records immediately. If the numbers don't match, investigate before filing. Common discrepancies include refunds, chargebacks, or timing differences at year-end.
Note which platform each deposit came from.
If you work on multiple platforms, your bank statement won't always make it obvious which deposit came from where. Adding a note or tag when deposits arrive saves time later.
Keep records for at least three years.
The IRS can generally audit returns filed within the last three years. Hold onto your platform reports, bank statements, and any supporting documentation for at least that long.
The Bottom Line
Platform fees from Upwork, Fiverr, and similar marketplaces are deductible business expenses. Report your gross earnings (the full amount before fees) on Schedule C Line 1, then deduct the platform's service fees on Line 10 (Commissions and Fees). The math works out to the same net income either way, but reporting it correctly keeps your return consistent with the 1099-K the IRS receives.
The trickiest part isn't the tax rules. It's keeping track of all the numbers across platforms, bank accounts, and payment methods. If you download your transaction history, total up your fees, and match everything against your bank deposits, you'll have exactly what you need at tax time.
If you're juggling Upwork payouts, Fiverr deposits, and direct client payments all landing in the same bank account, Categorize My Expenses can sort through those transactions and map them to the right Schedule C lines. Upload your bank or credit card CSV, and it handles the categorization for you.
Disclaimer: This article is for educational purposes only and does not constitute tax, legal, or financial advice. Tax rules change, and individual situations vary. Consult a qualified tax professional for advice specific to your situation. Categorize My Expenses is a financial data organization tool. It is not a tax preparer and does not provide tax advice.
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