Reporting self-employment income on Schedule C involves entering your gross business receipts and deducting allowable business expenses to determine your net profit or loss. This form is used for sole proprietors, independent contractors, and other self-employed individuals to report income and expenses from a trade or business.
Part I: Income (Line 1)
- Enter gross receipts: Report all gross receipts from your trade or business on Line 1. This includes cash, credit card payments, and other forms of payment received for goods or services.
- Check Forms 1099-NEC: If you received one or more Forms 1099-NEC, ensure that the amounts reported in Box 1 are included in your total on Line 1. If there’s a discrepancy, attach a statement explaining the difference.
- Statutory employees: If you received a Form W-2 with the “Statutory employee” box checked in Box 13, report your income from Box 1 of the W-2 on Line 1 and check the box on that line. Statutory employees (e.g., full-time life insurance agents, certain drivers) do not owe self-employment tax on this income because Social Security and Medicare taxes were already withheld.
- Name, image, likeness (NIL) income: If you are a student-athlete earning NIL income (e.g., endorsements, merchandise), report it as self-employment income on Schedule C. However, royalties or other NIL income not considered self-employment should be reported on Schedule E.
Part II: Expenses (Lines 2–29)
- Deduct business expenses: Subtract allowable business expenses (e.g., supplies, advertising, rent, utilities) from your gross receipts. These are listed on Lines 2 through 29.
- Statutory employees: If you are a statutory employee, you may still deduct business expenses related to your income, but you do not owe self-employment tax on the net profit.
Line 31: Net Profit or Loss
- Net Profit Calculation: You subtract Line 30 (Expenses for business use of your home) from Line 29 (Total expenses before home office) to arrive at the Net Profit or Loss on Line 31.
- Statutory employees: Report your net profit or loss on Line 31 and include it on Schedule 1 (Form 1040), Line 3. However, do not report this amount on Schedule SE (Form 1040), Line 2, because self-employment tax is not owed.
- Self-employment tax: If you have net profit from self-employment (not statutory employee income), you must report it on Schedule SE (Form 1040) to calculate self-employment tax. The net profit from Schedule C, Line 31, is entered on Schedule SE, Line 2.
Additional Considerations
- Multiple businesses: If you have more than one business, file a separate Schedule C for each. You cannot combine statutory employee income with self-employment income on a single Schedule C.
- Married filing separately: If both spouses have self-employment income from separate businesses, each must file a separate Schedule C and Schedule SE.
- Community income: If married filing separately and one spouse carried on the business, the other spouse’s net profit may need to be included on Schedule SE if it is community income.
Source:
Schedule C Instructions (2025)
Schedule SE Instructions (2025)
Disclaimer: Always verify details with the current year’s IRS Form and Instructions or consult a tax professional for personalized advice.