I have a tax-related question that I think many fellow designers may also be wondering about:
Since Zazzle deducts marketing fees (such as for promoted listings or referral-related commissions) directly from our earnings, can these fees be considered a legitimate business expense for tax purposes?
In other words, are these deductions something we or Zazzle can track and report as advertising or platform fees when filing taxes as a small business?
If so, it would be helpful to know how Zazzle recommends categorizing them—or if any official documentation is available for designers to share with their accountants.
Pretty sure the answer is no because the fees are not included in the amount we’re paid. In other words, if your royalty is 10% on a $100 purchase that comes in as 3rd party, the amount you are paid is $5 ($10 less the 50% marketing fee - assuming wedding category here). So the amount reported as income is only $5, not $10. If they were reporting the whole $10 as income and then charging us separately for the marketing fees then yes, absolutely that fee would be considered a business expense. But since it’s never reported as income in the first place, I’m pretty sure you can’t deduct it.
I’m not even close to being a tax professional, so take that answer with a grain of salt, but I’m 99.99% sure I’m right on this.
If you are speaking of US income tax, the income to report is exactly what you see on your 1099 form. This represents the dollars you actually receive. There are no Zazzle side deductions applicable to the Zazzle income you have received. It was already deducted, if you will, by not having been paid to you in the first place. You might be able to deduct expenses for photo editing programs and clip art, however.
Yep, what everyone else said. Just posted this in response to same question by someone else in another thread before seeing this one:
Not a tax expert but this doesn’t make any sense to me. Your earnings are whatever Zazzle actually pays you. To write off fees as a business expense you’d first have to include them in your income. What would be the point? … You are paid $100 by Z, say it would have been $200 without the MF. Why would one claim the $200 as gross income only to turn around and say, but $100 of that shouldn’t be taxed because it was a business expense? This would serve no purpose other than to artificially inflate your gross income
Our earnings are whatever Z actually pays us. The deductions are just imaginary money we never had.
I just did a bit of online research. If you operate your Zazzle business as an LLC or sole proprietor, I see that marketing fees deducted by your company BEFORE earnings are paid are generally tax deductible on your Schedule C, typically on line 8 - Marketing and Advertising Fees. You do NOT have to earn the money in order to claim a business expense. You just need to maintain good records - receipts, etc to prepare your tax return. There have been tax years where I spent more than I earned when getting my business off the ground.
In essence, even though these fees are automatically deducted from your earnings, they are still considered business expenses that you incurred to generate income, and therefore, they are deductible.
I have been filing a Schedule C for a number of years with my Zazzle business. I am no tax expert and do my taxes with Turbo Tax. They always get accepted and have not had errors. I am not a tax expert. Do your research and talk to your tax preparer with any questions you have.
I would like to see a thorough breakout of these marketing fees in my earnings report from Zazzle for my tax preparation.
If I inspired this post based on my other post related to writing off advertising costs…I’m sorry if I got your hopes up but I did actually say that ADV tax deductions are as the IRS explains (verbatim) expected or necessary expenses shelled out from the business.
You can not deduct a loss of revenue due to advertising fees being levied on you or your royalties being reduced.
Thank you for your research. I will be checking into this. I also would like to see a thorough breakout of these marketing fees in my earnings report from Zazzle.
Having a tax return accepted is pretty much like having a design accepted into the Zazzle marketplace. No one is actually reviewing all the Zazzle products (that will not occur until a sale) and no one is actually reviewing all the tax returns (that will not occur until an audit).
Line 8 of the Schedule C would be useful if you are marketing your products through a website you pay for. And it would also be useful if you are marketing your products through printing business cards, which you pay for. If you rent a billboard to advertise your Zazzle products, that is a valid deduction too. And yes, you can deduct those fees whether your business is in the black or not. That money was in your pocket before you spent it on the website, the business cards and the billboard rental.
I would not personally take the risk of using Line 8 to deduct monies which were never in my pocket and were not paid by me.
I see that marketing fees deducted by your company BEFORE earnings are paid are generally tax deductible on your Schedule C
I don’t know what you mean by that.
Your imaginary earnings from Z are $200. But your gross income that they actually paid you is $100 because they deducted the other $100 in fees. You can’t claim a gross income of $100 and then also “write-off” $100 in marketing expenses you never spent, making your tax liability zero. Any deductions for marketing expenses would be on Zazzle’s end.
Zazzle could make any payment terms they want. They could add a clause that says “if it’s raining in Spain when the order is placed, a $2 fee will be deducted.” Our earnings are only what we are actually paid by Zazzle (as reflected on the 1099s as @Windy said). We look at our Royalty breakdowns and see a Gross royalty and then our Net after fees. But that Net is our actual Gross income. Anything above that Net is just imaginary income we never earned.
I would not personally take the risk of using Line 8 to deduct monies which were never in my pocket and were not paid by me.
Exactly. The whole point of a business deduction is to differentiate between gross and net income. Like if someone pays you $100 for a widget, but it cost you $80 to manufacture it, then you can deduct the $80 as a business expense, so that the only portion you’re paying taxes on is the net income (the $20 leftover after expenses.)
But in this case, the customer is not paying us, they’re paying Zazzle - the only portion that is _ our _ income is the part that Zazzle pays to us. So just forget the marketing fee for a minute and look at it as a “none” sale. Zazzle collected $100 and paid me $10. Only the $10 is reported to me as income. I can’t deduct the $90 that Zazzle spent on manufacturing the product and paying its employees because those are Zazzle’s expenses, not mine. The marketing fee is no different.
I was simply quoting what I found when I did a google search asking if it was permissible to expense marketing fees on my 1040 Schedule C that were deducted from my earnings PRIOR to those earnings being paid to me by the company who pays me (Zazzle, in this case) for the tax year these deductions from my earnings occurred. I simply shared the answer that came out of that online search. I also stated I am no tax expert and that everyone can consult their tax expert if they have a question about it. Take this info with a grain of salt and do what you want with it! I have nothing further to add on this topic. I understand that our earnings are what we are actually paid. Was not talking about our paid earnings. I was referring to what can be expensed as a business expense, not what was actually earned on our 1099s.
I am not a tax expert, but I’m guessing most online information does not account for, or understand how Zazzle works and is confused by Zazzle’s use of ‘marketing fee’. While typically you can write off ‘marketing fees’ or ‘website fees’ these are fees you are actually being charged directly and must pay for. For example, I pay fees to Shopify every month for shipping labels and apps, so I DO write those off - they are charged to me and I pay for them actively. BUT Shopify also takes their fee out of each sale prior to my payout, which I CANNOT write off - because that is already accounted for in my final income (like how we are paid by Zazzle, after fees are taken out).
Now if you did pay for outside advertising or marketing expenses like e-mail, website, etc. Then yes, those you can.
100%. Most generic online info isn’t accounting for such specific intricacies as this. And this is exactly why AI generated “answers” are not allowed in the forums.
Zazzle’s marketing royalty fees (those deductions for promoted sales) can typically be claimed as a business expense if you’re reporting your Zazzle income as part of a small business or sole proprietorship.
I’ve been tracking mine and grouping them with other platform-related costs under “Advertising” or “Commissions and Fees” on Schedule C. It’s definitely worth checking with a tax pro for your situation, but don’t overlook these deductions they add up!
What ??? @jophb comment honestly sounds pretty human to me—it reads like someone sharing their personal experience in a clear and conversational way, even with some uncertainty about tax specifics. Phrases like “I’m guessing” and “for example, I pay fees to Shopify…” show a natural cadence and personal anecdotes that AI typically doesn’t mimic so casually. Plus, the logic reflects their real-world process rather than a generic or overly polished explanation.
If anything, it feels like a creator trying to help others navigate murky waters something we see often on Zazzle threads. Col have you been cautious? Did the comment seemed “too structured” or hit certain phrasing patterns, but from what I see, it doesn’t ring the alarm bells you’d associate with AI-generated content.
Zazzle’s updated Creator License Agreement (effective April 1, 2025) states that the Marketing Royalty Fee is deducted from your Gross Royalty not your net payout. That means even if you never receive the full amount, it’s still part of your reported income.
If Zazzle reports the gross royalty on your 1099-MISC (as they’ve done in past years), then yes sole proprietors and small businesses can typically deduct the Marketing Royalty Fee as a business expense. This aligns with IRS guidelines: if you’re taxed on the full amount, you’re entitled to deduct the associated costs.
Zazzle defines “Gross Royalty” as the amount before any fees are subtracted. See the glossary in their Creator FAQs PDF: Zazzle Creator FAQs – March 31, 2025
So while this fee is new, it’s not “imaginary money” it’s part of the transaction. If it’s included in your taxable income, it qualifies as a deductible expense under categories like “Advertising” or “Commissions and Fees” on Schedule C.