![]() ![]() ![]() Will not deduct home office expenses or depreciation for business assets, like a cell phone or printer. Had only one business as either a sole proprietor, qualified joint venture, or statutory employee.ĭo not have prior year unallowed passive activity losses from this business, AND Used the cash method of accounting (all rideshare drivers automatically use the cash method)ĭid not have inventory at any time during the year. ![]() It’s shorter because it skips some of the less common sections or additional forms of the Schedule C that take a bit longer to fill out - for example, the depreciation or home office deduction forms. The Schedule C-EZ is a shorter version of the Schedule C form. Maybe - there are a lot of requirements for filing a Schedule C-EZ (similar to to the Form 1040-EZ), so not everyone is eligible to file this quicker form. Don’t worry though - you’ll only need one Schedule SE to calculate your self-employment tax for all of your self-employment jobs. Pay special attention to the Business Activity Codes for guidance on what constitutes a unique “business activity” and thus a separate Schedule C. The IRS Schedule C instructions provide guidance on what types of work warrant separate Schedule Cs. (Don't forget, the FREE Stride App can help you save thousands of dollars on your tax bill and hours of tax prep time by automatically tracking your miles and expenses, surfacing money-saving deductions, and getting your forms IRS-ready. But if the type of work is the same - say you work for both Uber and Lyft - then you can combine both sources of income on one Schedule C as your only “ridesharing business.” If you are both a rideshare driver and an independent graphic designer, you’ll need to fill out two separate Schedule Cs for each type of work, since they’re separate businesses. Heads up: You may need to fill out multiple Schedule C’s depending on how many different types of independent work you do. You can read a bit more about appropriate documentation here. That’s why it’s a good practice not to try to deduct expenses that you can’t substantiate with receipts, logs, or other records - especially if you deduct expenses that also serve some kind of personal use (like a cell phone). Here's the catch: When you deduct business expenses, it’s really important to document your expenses. If you’re ever audited, you’ll need to prove that the deductions you claim on your Schedule C were indeed for your business. Any of those expenses that you paid in order to run your business may be deductible. If you take a look at Part II of your Schedule C (or if you go through the Business Expenses interview pages of any tax filing software), you’ll see a lengthy list of deductible expenses. This means that you can subtract your expenses from your total business income, and lower the amount of income that is subject to taxation. Depending on the type of independent work that you do, many of your “ordinary and necessary” business expenses are deductible, such as advertising, legal fees, and travel. What Kinds of Expenses Can I Deduct on the Schedule C? ![]() Even If You Don't Receive a 1099-NEC, You May Have to Report Your Self-Employment Income.īecause companies aren’t required to issue 1099-NECs unless you were paid at least $600, you might have several sources of self-employment income that totals well above $600 - without receiving a single 1099-NEC. If you use a tax filing software, this form will be automatically generated when you report that you are self-employed, or that you received a 1099-NEC or 1099-K. How Do I Know If I Need to File a Schedule C? This number is the income that is subject to taxation, and is reported on Line 12 of your 1040. The business profit comes from taking your business income, and then subtracting your business expenses. The goal of the Schedule C is to determine your business profit. Each section of the Schedule C affects your tax liability, just like on the 1040. The Schedule C is set up similar to the Form 1040 it includes your income, your deductions, and details about yourself and your business. If you are self-employed, an independent contractor, or received any income as a 1099 non-employee in a given tax year, you’ll most likely need to file Schedule C: Profit or Loss From Business. These forms serve to provide more information about the details of your tax return. This means that the Form 1040 serves as a kind of summary for all of those other forms. The Form 1040, which you use to file your federal tax return, has a whole host of related forms that must be filed depending on what kinds of income, deductions, credits, and other taxes you claim. ![]()
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