Do I Need to File a Schedule C?
Schedule C (Form 1040) is used to report income or loss from a business you operated or a profession you practiced as a sole proprietor. If you are self-employed or run a business as an independent contractor, you may need to file Schedule C.
When to File Schedule C
- Business or Profession as a Sole Proprietor: Use Schedule C to report income or loss from any business you operated or profession you practiced as a sole proprietor. This includes freelance work, consulting, or any other self-employment activity.
- Statutory Employees: If you are a statutory employee (such as a full-time life insurance agent or certain delivery drivers), you must report your wages and expenses on Schedule C.
- Qualified Joint Ventures: Income and deductions from certain qualified joint ventures must also be reported on Schedule C.
- Form 1099 Income: If you received income reported on Forms 1099-MISC, 1099-NEC, or 1099-K, you may need to report it on Schedule C, depending on the nature of the income.
What Constitutes a Business?
An activity qualifies as a business if your primary purpose is to earn income or profit, and you are involved in the activity with continuity and regularity. Activities that are sporadic, not-for-profit, or hobbies do not qualify as businesses for tax purposes.
Important Notes
- Separate Filings for Statutory Employees: If you have both self-employment income and statutory employee income, you must file two separate Schedule C forms. You cannot combine these amounts on a single form.
- Self-Employment Tax: If you report net profit on Schedule C, you must also file Schedule SE (Form 1040) to pay self-employment tax, unless you are a statutory employee (in which case you do not report this amount on Schedule SE).
- Home Office Deduction: If you use part of your home for business, you may be able to deduct home office expenses. However, you must first determine the portion of your gross income attributable to the business use of your home.
How to Add Schedule C in OLT Software
To add Schedule C using OLT (Online Taxes) software:
- Open your tax return in the software.
- In the left menu (or tap the three dots in the top-right corner on mobile), click on Federal.
- Under the Income section, click on Show more near Business Income or Loss.
- Click on Add or Edit next to Business Income or Loss - Schedule C.
- Follow the on-screen instructions to complete the form.
Source:
Schedule C (Form 1040) Instructions
Disclaimer: Always verify information with official Federal or State Department of Revenue Forms and Instructions.