Can you write off unpaid invoices?
Can you write off unpaid invoices your customers never paid? Here is the short answer.
Often, yes. The IRS allows a deduction for business bad debts in certain situations, generally when the amount was previously included in your income and is truly uncollectible. Whether you qualify depends largely on your accounting method, so confirm the treatment with a tax professional before writing off an unpaid invoice.
Key points: can you write off unpaid invoices?
- The IRS covers business bad debts in Topic No. 453[source].
- Businesses using cash-basis accounting generally haven’t reported unpaid invoices as income, which affects whether a deduction is available[source].
- Keep records of your collection efforts; they help show the debt is worthless.
Before writing off, consider whether an experienced collection partner could still recover some of it.
Not tax advice.
More answers
- Customer won’t pay invoice: what do I do?
- What legal action for unpaid invoices can I take if a customer refuses to pay?
- How much do collection agencies charge?
- Who pays collection agency fees: me or the debtor?
- How do I write a payment demand letter?
- Is small claims court for unpaid invoices better than a collection agency?
- Can I hire a collection agency to collect a debt that’s small?
- How to hire a collection agency: what are the steps?
- How to send someone to collections: what are the steps?
Sources: IRS Topic No. 453, Bad Debt Deduction (accessed Oct 18, 2026).
Can I deduct unpaid invoices on my taxes?
Only if the amount was included in your income. Accrual-method businesses can generally deduct worthless receivables; cash-method businesses usually can’t, because they never reported the income[source].
Owed money by another business?
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