Article: 50216
Overview
Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity. For example, a sporadic activity, a not-for-profit activity, or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Schedule 1 (Form 1040), line 8j.
Also, use Schedule C to report (a) wages and expenses you had as a statutory employee; (b) income and deductions of certain qualified joint ventures; and (c) certain amounts shown on a Form 1099, such as Form 1099-MISC, Form 1099-NEC, and Form 1099-K. See the instructions on your Form 1099 for more information about what to report on Schedule C.
Add Schedule C
To add Schedule C:
- Go to Federal Taxes.
- Click Review.
- Click I’d like to see the forms I’ve filled out or search for a form.
- Enter Schedule C in the search box and click on Schedule C – Self-Employment Income to add and open the form.
- Enter your information and click Save.
Income and Expenses
If you need to add income to your Schedule C, once you have added the form, select Yes in response to the question, Do you have business income to enter that’s not reported on a Form 1099-NEC or 1099-Misc?. This will generate a box for the income entry.
To enter expenses, respond Yes to the question Did your business have expenses? and enter the expense amounts on the applicable lines.
Income Reported on Form 1099-NEC or 1099-MISC
If you earn compensation reported on a 1099-MISC/1099-NEC that is related to your self-employment (business), complete the Schedule C screens, then when you go to enter your 1099-MISC/1099-NEC it will prompt you to select which business that form is related to.
If you have not added Schedule C, you can select I’d like to tell you about my business and add Schedule C info before continuing with adding Form 1099-NEC or 1099-MISC info.
Earnings you receive as a non-employee are subject to Social Security and Medicare premiums. Be sure and deduct any expenses you have related to the earnings.
Cost of Goods Sold
Cost of goods sold is calculated based on your answers in the business inventory section. When you answer Yes to the question Did you have any business inventory, you will be presented with a series of questions. The software will calculate your “cost of goods sold” figure from these entries.
No Income or Expenses
Our software requires that you have either income or expenses to report for your self-employed business. If you have neither income nor expenses for this tax year, the IRS does not require you to file for your business, and you will not be able to proceed with this form added to your return.
If your business is inactive, but you receive payments such as insurance that are related to the business, you must report those payments on your Schedule C.
Vehicle Expenses
After you have added your Schedule C to your return, you can include your business vehicle information by adding the Your Business Vehicle form, using the same forms search you used to add your Schedule C. This screen is where you can detail the expenses you paid for your vehicle during the year.
- Go to Federal Taxes.
- Click Review.
- Click I’d like to see the forms I’ve filled out or search for a form.
- Enter Vehicle in the search box and click on Your Business Vehicle to add and open the form.
- Enter your information and click Save.
You can select to use the standard mileage rate method by entering the number of business miles.
If you want to use the actual expenses, you will need to use the different vehicle expense categories – gas, oil, insurance, repairs, tolls, etc.
If you qualify for both methods of deduction, and you have the records to back it up, you may want to figure out your deduction both ways to find which one is more beneficial overall.