Schedule C

Learn more about how to fill out and file IRS schedule C. Includes step-by-step instructions and frequently asked questions.

Updated on April 28th, 2023

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Schedule C, also known as Form 1040, is an IRS form that sole proprietorships can use to record profits and losses when they file their taxes.

You can learn more about the form by reading the Schedule C instructions below.

Schedule C Instructions:

1. Enter your business information.

It is important that you enter your business information accurately in the first section of the form. This will help the IRS to identify your sole proprietorship. This includes your social security number and employer ID number (if you have one).

The bottom of the first section has a short questionnaire that asks you to provide more information about the age and operating status of your business.

Schedule C Instructions

2. Record income and expenses.

In part one and part two, you will need to enter detailed information about your income and any income-related expenses. As you are working through these sections, you will want to make sure that you have access to your accounting software, or to a ledger that you can reference to locate all of the financial information that you need.

3. Deduct the cost of goods sold.

The IRS allows you to deduct the cost of goods sold from your business income. This is a key way for you to lower your income taxes. Essentially, the cost of goods sold refers to the amount of money that it cost you to obtain goods that you sold for a profit. That cost is deductible when it comes to the purchases and labor involved.

4. Enter additional expenses.

The final two sections of the form allow you to enter vehicle expenses and any other expenses that you may not have been able to list elsewhere. If you intend to write off vehicle expenses, you will need to enter mileage details. It's best to keep a driving log so that you can track your business-related travel and record it accurately on Schedule C.

5. Submit Schedule C.

Once you have totaled all of your expenses, you can submit Schedule C with your tax return. The IRS can use this document to verify the income and expenses of your sole proprietorship. Remember to keep all of your receipts and invoices in case you are audited, and keep a copy of Schedule C for your own reference.

FAQs:

Who has to file a Schedule C?

Any business owner that operates his/her business as a sole proprietor must fill out Schedule C when filing his or her annual tax return.

How do I fill out a Schedule C 2019?

  1. Enter your business information.
  2. Record income and expenses.
  3. Deduct the cost of goods sold.
  4. Enter additional expenses.
  5. Submit Schedule C.

What is a Schedule C?

Also referred to as Form 1040, a Schedule C is an IRS form that sole proprietors use to record their profits and losses when they file their taxes.

Where can I get a Schedule C tax form?

You can get a Schedule C tax form from the IRS.

What can I deduct on Schedule C?

You can deduct the cost of goods sold from your business income. In addition, legal and professional fees, such as fees charged by accountants, bookkeepers, and online bookkeeping, can also be deducted on Schedule C, as long as they are necessary and directly related to running your business.

Who can file a Schedule C?

Business owners that are sole proprietors can file a Schedule C.

Do I have to file Schedule C if I get a 1099?

As a self-employed person, you are required to report your income if the amount you receive from all income sources totals $400.00 or more.

How do I file a Schedule C for free?

The IRS offers a Free File option. However, this option is only available to taxpayers whose income meets the current eligibility limit of greater than $66,000.

Do I need a business license to file a Schedule C?

No, you do not need a business license to file a Schedule C.

How much do you have to make to file a Schedule C?

You have to file a Schedule C if the income you receive from all sources totals $400.00 or more.

Can I file a Schedule C with no income?

No, if your sole proprietorship business has no profit or loss during a full year, it's not necessary to file a Schedule C form.

Is there a Schedule C calculator?

You can use the Schedule C calculator at selfemployment-taxcalculator.com to calculate the basic income amount that you will find after subtracting your expenses from your revenue.

Do I need to use Schedule C for my taxes?

Schedule C is for sole proprietorships. If you have a business and you are the sole proprietor, then you must use Schedule C.

Is IRS Schedule C the same as Form 1040?

Schedule C is a subsection of Form 1040, which is the IRS tax return form for individuals.

Does the IRS offer any additional instructions for filing Schedule C?

The IRS has an official publication that provides detailed instructions and definitions for each section of Schedule C. The document also explains Schedule C expenses. You can access the instructions on the IRS website.