Schedule C
Schedule C
Profit or Loss From Business (Sole Proprietorship)
Every line is explained below in plain English — click any line to see what it means, who needs to fill it in, and what people commonly overlook.
Income
- 1 Gross Receipts or Sales The total amount your business received from selling products or services before subtracting any expenses, returns, or cost of goods sold.
- 2 Returns and Allowances The total amount of refunds, returns, rebates, and allowances you gave to customers during the year. This reduces your gross receipts on line 1.
- 3 Line 1 Minus Line 2 A simple calculation: line 1 (gross receipts) minus line 2 (returns and allowances).
- 4 Cost of Goods Sold The direct cost of the products you sold during the year.
- 5 Gross Profit Line 3 minus line 4. This is your revenue after subtracting returns and the direct cost of products you sold.
- 6 Other Income Business income that does not come from selling your main products or services.
- 7 Gross Income The sum of line 5 (gross profit) and line 6 (other income). This is your total business income before any business expenses are subtracted.
Expenses
- 8 Advertising The total amount you spent on advertising and marketing your business during the year.
- 9 Car and Truck Expenses The business-use portion of your vehicle expenses.
- 10 Commissions and Fees Commissions and fees you paid to non-employees for sales or services related to your business.
- 11 Contract Labor Payments you made to independent contractors who performed services for your business.
- 12 Depletion The deduction for the using up of natural resources your business extracts or harvests.
- 13 Depreciation and Section 179 Expense Deduction The portion of business assets you can deduct this year for wear, tear, and obsolescence.
- 14 Employee Benefit Programs The cost of benefit programs you provide to your employees (not yourself).
- 15 Insurance (Other Than Health) The cost of business insurance premiums you paid during the year, excluding health insurance.
- 16a Mortgage Interest Paid to Banks Interest you paid on a mortgage for property used in your business, where the lender is a bank, savings institution, or other financial institution.
- 16b Mortgage Interest Paid to Individuals Interest you paid on a mortgage for business property where the lender is an individual rather than a bank.
- 17 Legal and Professional Services Fees you paid to attorneys, accountants, bookkeepers, tax preparers, and other professionals for services directly related to your business.
- 18 Office Expense The cost of office supplies, postage, small office equipment, and other office-related expenses that are consumed during the year.
- 19 Pension and Profit-Sharing Plans Employer contributions you made to retirement plans for your employees.
- 20a Rent or Lease -- Vehicles, Machinery, and Equipment Lease or rental payments for vehicles, machinery, and equipment used in your business.
- 20b Rent or Lease -- Other Business Property Rent you paid for office space, retail space, warehouse, studio, workshop, or any other business property that is not a vehicle, machine, or piece of...
- 21 Repairs and Maintenance Costs to repair and maintain business property, equipment, and vehicles (if using the actual expense method).
- 22 Supplies The cost of supplies used in your business that are not office supplies (line 18) and are not materials included in cost of goods sold (Part III).
- 23 Taxes and Licenses Business-related taxes and license fees you paid during the year.
- 24a Travel The cost of overnight business travel away from your tax home.
- 24b Deductible Meals The deductible portion of business meals.
- 25 Utilities The cost of utilities for your business premises -- electricity, gas, water, sewer, trash removal, telephone, and internet service.
- 26 Wages Total wages, salaries, and other compensation you paid to employees during the year.
- 27a Other Expenses The total from Part V (line 48) -- a catchall for legitimate business expenses that do not fit any of the specific categories on lines 8-26.
- 27b Reserved for Future Use This line is reserved by the IRS for future use. Do not enter anything here.
- 28 Total Expenses Before Business Use of Home The sum of all business expenses from lines 8 through 27a. This is the total cost of running your business before the home office deduction is applied.
- 29 Tentative Profit or Loss Line 7 (gross income) minus line 28 (total expenses). This is your profit or loss before the business use of home deduction.
- 30 Business Use of Home The deduction for using part of your home regularly and exclusively for business.
- 31 Net Profit or Loss Your final business bottom line: line 29 (tentative profit) minus line 30 (business use of home deduction).
Cost of Goods Sold
- 33 Method Used to Value Inventory The accounting method you use to value your inventory. The three options are cost, lower of cost or market, and other.
- 34 Change in Determining Quantities, Costs, or Valuations A yes-or-no question asking whether you changed the way you determine inventory quantities, costs, or valuations between this year and last year.
- 35 Inventory at Beginning of Year The value of your inventory on January 1 of the tax year.
- 36 Purchases Less Cost of Items Withdrawn for Personal Use The total cost of merchandise, raw materials, or products you purchased for resale or use in manufacturing during the tax year, minus anything you withdrew...
- 37 Cost of Labor The cost of labor directly involved in manufacturing or producing the goods you sell.
- 38 Materials and Supplies The cost of materials and supplies consumed in the manufacturing or production process.
- 39 Other Costs Any costs directly related to producing or acquiring your products that do not fit on lines 36, 37, or 38.
- 40 Add Lines 35 Through 39 A simple addition: the sum of lines 35 through 39.
- 41 Inventory at End of Year The value of all inventory you had on hand at the end of the tax year (December 31 for calendar-year filers).
- 42 Cost of Goods Sold Calculated Line 40 minus line 41. This is the calculated cost of goods sold -- the total cost of products you actually sold during the year.
Vehicle Information
- 43 Date Vehicle Placed in Service The date you first started using your vehicle for business purposes.
- 44a Business Miles The total number of miles you drove this vehicle for business purposes during the year.
- 44b Commuting Miles The total number of miles you drove this vehicle commuting between your home and your regular place of business during the year.
- 44c Other Miles All miles driven in this vehicle during the year that are neither business miles (line 44a) nor commuting miles (line 44b).
- 45 Vehicle Available for Personal Use A yes-or-no question asking whether this vehicle was available for personal use during off-duty hours.
- 46 Written Evidence to Support Deduction A yes-or-no question asking whether you have written evidence (such as a mileage log) to support your vehicle deduction.
- 47a Written Evidence Produced at Time of Expense A yes-or-no question asking whether your written evidence (from line 46) was produced at or near the time you incurred the vehicle expense.