Schedule C

1 — Gross Receipts or Sales Updated for tax year 2025

What this line means

The total amount your business received from selling products or services before subtracting any expenses, returns, or cost of goods sold. This includes all payments — cash, check, credit card, digital payment apps, barter, and cryptocurrency. If you received a 1099-NEC or 1099-K, the income reported on those forms goes here.

Does this apply to you?

  • You freelance or do contract work and received payment from clients
  • You sell products online through Etsy, Amazon, eBay, or your own website
  • You drive for Uber, Lyft, DoorDash, or any other gig platform
  • You provide professional services — consulting, design, writing, photography, tutoring
  • You received payment in trade or barter for goods or services you provided

Easy to overlook

Cash and Venmo payments with no 1099 Just because a client paid you through Venmo, Zelle, or cash does not mean the income is invisible. The IRS requires you to report all business income regardless of whether you received a 1099. Payment app reporting thresholds (1099-K) have changed multiple times, but your obligation to report has not. If you deposited business income into a bank account, the IRS can see the deposits. 1 [SOURCE: CP2000 pattern — unreported 1099-NEC and 1099-K income]

Bartered goods and services If you traded your services for someone else’s — a web designer building a site for a dentist in exchange for dental work — both parties owe tax on the fair market value of what they received. Most people treat barter as a wash. The IRS does not. 2 [SOURCE: IRS Schedule C instructions — Line 1]

Watch out for this

Reporting only the income that matches 1099 forms you received. Many sole proprietors add up their 1099s and enter that total on line 1, forgetting clients who paid less than the 1099 reporting threshold or paid through apps that did not issue a 1099-K. The IRS cross-matches 1099s to your return, but if your reported income is lower than your bank deposits, you will hear from them.

  • Line 2 — Schedule C — Returns and allowances subtracted from gross receipts
  • Line 4 — Schedule C — Cost of goods sold subtracted from line 3 to get gross profit
  • Line 31 — Schedule C — Net profit or loss; where this income ends up after all expenses
  • Line 8 — Form 1040 — Where Schedule C net profit flows onto your individual return

Footnotes

  1. IRS CP2000 Notice, Information Return Matching. https://www.irs.gov/individuals/understanding-your-cp2000-notice ↩

  2. IRS Schedule C (Form 1040) Instructions, Line 1. https://www.irs.gov/instructions/i1040sc ↩

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