Why 99designs Fees Count as a Business Expense
Any fee you pay to a platform in order to find clients, host contests, or process payments is an ordinary and necessary business expense under IRS rules. That covers 99designs membership tiers, per-contest entry or upgrade fees, commission percentages taken out of your payout, and any withdrawal or currency conversion fees the platform charges. The same logic applies to Dribbble Pro, Behance promotions, Upwork service fees, or any other marketplace you use to land design work.
The key test the IRS uses is whether the expense is ordinary (common for people in your line of work) and necessary (helpful for running your business). Paying to access a platform full of potential clients clearly meets both.
Where to Report It on Your Tax Return
If you are a sole proprietor or single-member LLC, these fees go on Schedule C, which attaches to your Form 1040. There is no single official line labeled "platform fees," so most designers use one of these:
- Line 10, Commissions and fees, for the percentage 99designs takes out of each project
- Line 17, Legal and professional services, or Line 27a, Other expenses, for membership or subscription costs
Pick one category and be consistent year to year. What matters most is that the total expense is captured somewhere on the form, not which exact line it lands on.
Keep the Right Records
99designs usually shows your gross project value and then deducts its fee before paying you out. That means your bank deposit is often lower than what the client actually paid. Two things follow from this:
- Report your gross income (what the client paid), not just the net deposit you received.
- Deduct the platform's cut separately as an expense.
If you only report the net amount that hit your bank account, you are technically underreporting income and could get flagged if 99designs issues you a 1099-NEC or 1099-K showing the higher gross figure. Save monthly statements or transaction histories from the platform. A simple spreadsheet or expense-tracking app that logs the date, amount, and purpose of each fee is enough to back up the deduction if the IRS ever asks.
Other Deductions Designers Often Miss Alongside Platform Fees
Once you start writing off marketplace fees, look at the rest of your toolkit. Common deductions for freelance designers include:
- Software subscriptions like Adobe Creative Cloud, Figma, or Procreate
- Stock photo, font, or mockup licenses
- A portion of your home internet and phone bill used for client work
- Portfolio website hosting and domain fees
- Payment processor fees from Stripe, PayPal, or bank transfers
All of these follow the same rule as 99designs fees: if the cost helps you earn design income, it is deductible. Track it during the year rather than trying to reconstruct it in April, since scattered receipts and platform statements are the easiest deductions to lose.