The purpose of the Schedule C is to report profit or loss from a business operated as a sole proprietorship. The IRS Schedule C instructions include general information on different types of business such as LLCs and Husband-Wife Partnership or Joint Venture Status and other schedules that may be required.
Your Schedule C is Attached to Your 1040
Use Schedule C Attached to Form 1040 for:
– Statutory employees who had wages and expenses
– Anyone who needs to report income (or loss) from a business (or profession) that was run as a sole proprietorship
– Certain joint ventures
– Miscellaneous income (see form 1099-MISC for types of income to report)
Any endeavor is considered a business if the reason you participated in it was for income or profit and you did it regularly and continually. A hobby or periodic activity isn’t a business, but the income is reported on Form 1040 or form 1040NR.
Statutory employees and small businesses with business expenses of $5,000 or less may file a Schedule C-EZ if they meet the criteria on that form.
When to File Two Schedule C Tax Forms
According to the Schedule C instructions, if you had both self-employment income and statutory employee income, you must file 2 Schedule C’s. You cannot use Schedule C-EZ or combine these amounts on a single Schedule C.
A vital piece of information required on your tax return is the Principal Business or Professional Activity Codes of the business you are reporting. The instructions for the Schedule C include a chart of the NAICS (North American Industry Classification System) codes and you must select the six-digit number that best reflects your principal business activity.
Note. If your principal source of income was from farming activities, you should file a Schedule F not Schedule C.
What’s New in IRS Schedule C Instructions?
- Standard mileage rate – The business standard mileage rate is 55.5 cents per mile.
- No separate payment card reporting requirements. Gross receipts received via payment card (credit and debit cards) and third party network payments are not separately reported on Schedule C.
- Heavy highway vehicle use tax extended through September 30, 2017. If you use certain highway trucks, truck-trailers, tractor-trailers, or buses in your trade or business, you may have to pay a federal highway motor vehicle use tax.
Income Tax Return Help for Self Employment
Being a sole proprietor is difficult enough as it is and you probably want to spend your valuable time being involved with running your business. If you would like help filing your tax return as a self-employed person you should consider the TurboTax Home and Business Edition.
You will have step by step guidance as you file your personal and business taxes. Filing your Schedule C Form with your tax deductions maximized is the best way to go and with TurboTax you are guaranteed the biggest tax refund possible.