Upwork's withdrawal fees and tax returns

[amt17]

I have noticed that there is no supporting documentation (e.g. invoice) for the withdrawal fees. While everything else can be downloaded (service fee, VAT, membership fee, invoice etc.), there is no documentation for the withdrawal fee. It only shows up on the transaction history (which can't be downloaded).

As I understand it, without supporting documentation for an expense, the expence can't be deducted on the tax return.

1. How do others go about deducting the withdrawal fees as business expences?

2. Why is there no supporting documentation for the withdrawal fee charge?

[lysis10]

Transaction list can be downloaded to a CSV. I download it every year for my taxes. I then create a formula to extract fees into a separate column.

You have to save the downloaded CSV to an XLSX file to save the formulas, but here is the formula that matches up with the columns created from the download.

Commission Fees :   =IFERROR(IF(SEARCH("Service Fee", D2) > 0,J2,0), 0)

Just paste that into any column on the downloaded transactions. That will output the fees paid to Upwork in a separate column. If it's not a commission fee, then the column will show 0. Then, just SUM() the column and you have the total commission fees paid to Upwork.

eta: That formula is for one record/line item on the Excel spreadsheet. You have to "fill down" from there to get the rest of the rows. 

[amt17]

Hi Jennifer,

Thank you 🙂

What I mean is basically an invoice as supporting document for what and why I pay the fee. Without a supporting document issued by Upwork, I don't see how I can document the expense (e.g. for an audit).

As far as I can see, it's just an undocumented expense. We all know it's there, it shows on the online "Transaction History" (if downloading the transaction history for a specific period, you will get everything but documentation for the withdrawal fee and the transaction history (overview) itself can't be downloaded), but there is no legally valid documentation that can be used to deduct it as a business expense.

[zoe007]

Hi Annette,

I can't offer any insights into the Upwork supporting document procedures, so I will leave that to the Upwork team to provide the official reasoning.

When I withdraw monies from my Freelancer account, I do two things:

1) Take a copy of the Upwork withdrawal message that shows it was successful (go to print mode) when you withdraw the monies - it's rapid and not very detailed. It shows a withdrawal amount and service fee.

2) Take a copy of the email with a confirmation of the payment details (again, go to print mode)

I can then reconcile these individual transactions against the Upwork posting in my accounting software.

My accountant in the UK advised me to process these against Bank Fees, hence exempt from Tax in the UK. 

I hope this helps.

All the best,

Zoe

[amt17]

Excellent - thank you! 🙂

[VladimirG]

Hi Annette,

Following up on great info and advice Jennifer provided (thanks Jenn!), I'd like to confirm that you're referring to an invoice for withdrawal fees?

I checked your account it's by design that no invoice is displayed in Reports on your end since there isn't a withdrawal fee for the specific withdrawal method you're using. Please let me know if you are referring to a different type of transaction.

[amt17]

Hi Vladimir,

I used a different withdrawal method earlier and paid the withdrawal fee.

[VladimirG]

Hi Annette,

Thanks for the follow-up. Could you please pm me a screenshot of the transaction so I can take a look and advise? 

[amt17]

It is the usual 0.99 withdrawal fee. Currently I use another withdrawal method and it's not a big issue unless I change withdrawal method later if relevant. But it bugs me having an expense I can't properly document for tax purposes to the point where I'm likely to simply not deduct the expense for withdrawals due to lack of proper documentation.

[yuktimat]

If Upwork is taking out money ($30) from my account, in my case for withdrawal, why can't they give the bill showing they charged me for withdrawling money? Without a supporting invoice/bill it can't be considered as an expense during my Audit. This really needs to be addressed.  Where does this $30 goes? who takes it?  is it upwork or 3rd party bank?

[PradeepH]

Hi Amit,

I understand your concern. A withdrawal fee is not a service or a product that we offer, so we do not issue an invoice for it. However, we do provide invoices for membership fees and service fees, as they are part of our business. You may reach out to your CA/Tax advisor for guidance on this matter.

- Pradeep