How to Fill Out Schedule C for Form 1040

Do you need to report your business income and losses to the IRS? If so, you need to figure out how to fill out 1040 Schedule C as soon as possible. In this article, we have covered all the aspects you need to know without any stressful language. We believe that tax paperwork can be a simple job! Read our Schedule C 1040 instructions, and you’ll adopt our attitude.

What Is a Schedule C Tax Form

The IRS Schedule C 1040 Form is an official document that lets you inform the Internal Revenue Service (IRS) about your business loss and income during the financial year. The IRS analyzes your 1040 to calculate the right amount of taxes and refunds. Talking with legal terms, this tax return form lets you report net income and loss to determine self-employment and federal income taxes. It’s literally everything you need to know about its purpose!

You probably also want to know how to get Form 1040 Schedule C in the most convenient way. Click the link to read our brief article to learn about all the best practices.

Who Files a Schedule C?

If you are a sole proprietor, you need to know that it’s necessary to file one form for reporting each business you have. You can consider yourself a sole proprietor if:

  • Your business can’t be qualified as any other US business entity. It means that you are not a sole proprietor if you have a partnership or, say, a corporation.
  • You are the only boss in your business, and there’s no one who holds a part of your salary to pay the taxes.
  • Your main purpose is to make money with your business.
  • Your business is a regular occupation and not a temporary/occasional hobby.
  • You run a single-member LLC, and you are not elected for a custom taxation method. One-owner LLCs are considered sole-proprietorships by default in the US, but you should check your status anyway.
  • You are a freelancer.

How to Fill Out Schedule C for Form 1040?

Ready to fill out your Schedule C? Do these easy steps before you start:

  • Open the official instruction for extra details;
  • Figure out your SSN (Social Security Number) and EIN (Employer Identification Number) if you have one;
  • Find your income statement and the balance sheet for the reportable tax year;
  • Gather all the receipts and statements for all kinds of business purchases – anything from foods to buildings.
  • Prepare inventory count and valuation (only if you sell goods);
  • Your mileage records are welcome here too.
Now, let’s take a look at the essential steps to fill out this schedule neatly and quickly:

  1. Lines A-J – Here goes your personal info, such as name, business name, SSN, EIN, business address, and preferred accounting method. You also have to answer 4 simple questions in lines G-J if they apply to your case.
  2. Part I – Fill out all the lines in the section and calculate your gross profit and gross income by following the instruction.
  3. Part II – Here you can report all kinds of expenses you had within the tax year. Carefully overview your receipts, statements, and other sources to report your expenses in full size. You can calculate your net profit or loss here too.
  4. Part III – if you sell goods, you have to calculate the total cost of sold goods in this section. Select the most suitable evaluation method and do the calculations.
  5. Part IV – fill it only if you claim vehicle expenses Form 4542 doesn’t work for you.
  6. Part V – list all the expenses that weren’t included in Part II and enter total expenses in line 48.
Now that you know how to fill out Schedule C, you can use the PDFLiner online editor to fill out your form without any extra questions popping up in your head. We provide the latest template of Form 1040 Schedule C along with all the instruments you may need to accomplish it. The platform supports direct submission and printing for your comfort.

How to Sign Schedule C Online?

If you want to accomplish your 1040 form without printing it, you will enjoy the e-signature feature on PFDLiner. Read our quick guide on how to sign 1040 and use one of the digital signature methods, including:
  • Digital generation – simply type your full name and press ‘Sign’ to generate a neat and secure digital signature.
  • Drawing – use your mouse, trackpad, Apple Pencil, or any other input device to draw your signature digitally.
  • Upload – drag and drop a PNG signature saved on your device.
  • Capture – scan a signature from a piece of paper with your device camera.

The feature works on computers, iPads, and iPhones. All your signatures are encoded and can’t be faked.

How to File Schedule C?

Normally, Schedule C is due by April 15, but in 2021, the deadline is temporarily shifted to May 17. Make sure to file your form by the date. You can submit the form either by mail or email. The second method is much better as it excludes the probability of letter loss and makes form delivery instant. Electronic submission is done via the IRS e-file directly, or with the help of the licensed IRS e-file providers. You must attach your Schedule C to your Form 1040.

FAQ

Here are some brief answers to additional questions about Form 1040 Schedule C that may have popped up in your mind.
Customer:
What is the purpose of a Schedule C?
Support:
Schedule C is an additional form that lets you report your business income and loss within the tax year to the IRS. 
Customer:
What expenses can you deduct on Schedule C?
Support:
The list of permitted deductions includes:

  • medical taxes;
  • taxes paid;
  • home mortgage interest;
  • charitable gifts.

Deductible business expenses include:

  • bank charges;
  • car, truck, vehicle, and equipment expenses;
  • commissions, fees, and memberships;
  • employee wages and contract labor;
  • depreciation, repairs, and utilities;
  • travel, meals, and entertainment;
  • interest on loans;
  • business insurance and professional services;
  • employee benefit programs;
  • necessary business supplies.

Use the itemized deduction amount if your total itemized deductions exceed the standard deduction.
Customer:
Where to deduct a computer from Schedule C?
Support:
You can deduct a computer if you use it for business purposes at least 50% of the time. This is permitted under Section 179. Computers that cost less than $2,500 can be claimed as Other Miscellaneous business expenses. A part of these expenses can be deducted from your tax. 
Customer:
Do I need receipts for a 1040 Schedule C?
Support:
Yes, you need all your receipts and statements to fill out Part II – Expenses and Part V – Other Expenses. They can also serve as proof of the figures you provide. Keep all the receipts and statements during the year and archive them when the form is submitted.
Customer:
Can I file Schedule C online?
Support:
Yes, you can file your Form 1040 with Schedule C online using the IRS e-file feature, or another IRS-authorised e-file provider. 
Customer:
What are tax schedules?
Support:
Schedules are issued by the IRS to let you report additional information along with your tax return. There are 13 different schedules for Form 1040, and you can read about them all here
Printable Blank Schedule C (Form 1040)
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