How to Fill Out Schedule C — Easier than You Thought

Before we get to deal with the 1040 tax return form, you may have a few questions. Particularly, what is the purpose of a Schedule C?

Form 1040 Schedule C is a loss/income tax form. Everyone who does freelance, side gigs, or owns a single-person enterprise needs to file the form. We’ll show you how to do it and provide some tips on how to save a few tax dollars.

What Is a Schedule C Tax Form

It is a mandatory tax document, in which you provide details on how much money you make or lose as a sole proprietor of a certain enterprise. It is issued by the IRS, to which you must send the filled copy of the form.

This year’s deadline for filing IRS tax forms is May 17. If you fail to submit the form by that time, penalties and dues will follow.

If you were a victim of the winter storms, you have a right to the IRS disaster relief. That means getting a delay until June 15. If you want to know how to get the form 1040 Schedule C, we provide a guide on how to fill it out and edit it online for free.

Who Should Fill Out a Schedule C Form

So, who files a Schedule C? If you’re a sole proprietor of a small business or work for yourself, this form is obligatory for you to submit.

Basically, if you operate a flower stand solo, have an ice-cream truck, provide nail service in a mall, or design websites while not being affiliated with a company that provides such services — you are a sole proprietor.

That is why all freelancers are obliged to file Schedule C. But there are also a few additions you need to know about:

  • LLC. If you run a single-person LLC that has no employees except you, filing 1040 Schedule C is also a must. The reason is, in reality, there’s no difference between your LLC’s revenue and your personal income.
  • Side-gigs. If you have a full-time job but still do side gigs from time to time, you also need to file this form.
  • Farmers. In case your freelance work is about farming, you may need another form, Schedule F.
  • Rental. Finally, if you raise extra money from renting or receiving royalties, you need to file Schedule E.

This Schedule doesn’t apply to C or S-type corporations.

How to Fill Out Schedule C for Form 1040

Now, let’s see how to fill out the 1040 Schedule С step by step.

  • Goods. For starters, you need to assess the total cost of goods/services that you sold.
  • Revenue. Knowing how much exactly you have earned, calculate your gross profit.
  • Business expenses. In this section, enter all possible expenses you’ve had. It can be advertising, logistics, lawyers, storage, flower refrigerating, rental costs, travel expenses, and so on.
  • Subtraction. Now that you know the total sum of your expenses, subtract them from your gross profit. For this amount of money, you will pay your income tax.
  • Loss. If your calculations show that you didn’t earn any money and even lost some, that means you have a net loss. It can be deductible on your tax return.

It’s the main portion of the Schedule C 1040 instructions. And now, we’d like to provide a few additional details about filing the form.

  • Part III. Here you can calculate the total cost of your goods/services sold.
  • Part IV. Here you provide info on a vehicle that you have and use in your enterprise, especially if it’s car-related: trucking, taxi, deliveries, and so on.
  • Part V. Finally, you can name the remaining business expenses that you couldn’t fit in the first sections. It relates to maintenance costs if you have your own office, storage facility, and so on.
As you can see, filing this form isn’t much of a challenge.

How to Sign Schedule C Online

Before you send the form to the IRS, it must be e-signed. It shows that the tax form comes from a verified person and, therefore, can be processed.

But where to get an e-signature? You can get one from a service like PDFLiner. Here’s what you need to do:

1. Go to the PDFLiner website.
2. Find the form that you need in the search bar.
3. Open the edit page to fill out the 1040 C Schedule.
4. Click on the Add Sign button.
5. Further, click on the red button Add New Signature.
6. Then simply choose how you want to add one: draw, upload, or capture it. Now you have your own e-signature, with which you can verify any digital document. And here you will find more detailed info on how to sign 1040 online.

How to File Schedule C

Once you’re done with filling it out, you can download the form and save it to your device or cloud storage. Again, it’s best to use PDFLiner for that. Then:

  • Go to the official IRS website.
  • Choose how you want to file the form. In your case, it’s Business & Self-Employed.
  • Then choose Sole Proprietorship under Business Types.
  • Form 1040 will be the first on the list — read its info in case you need to specify any details.
E-filing is preferable as it allows the IRS to respond and process your form quicker. If you stick to old-fashioned postal mailing, it may take weeks to admit your form due to possible staff problems.

Schedule C Extra Tips

In this section, there are some tips that will help you fill out Schedule C more effectively.

1. Multiple forms

In case you have a few freelance venues or side gigs, you need to file more Schedule C forms. For example, if you work as a freelance sound engineer and also install acoustic equipment for weddings and birthday parties, you have to file two separate Schedule C’s.

2. Home office

If you work from home, you can use this Schedule to deduct “home office” expenses. The IRS sets a flat-rate deduction of $5 per square foot of your home office. So, measure the footage of your home space that is dedicated to your work. The maximum limit allowed is 300 square feet.

It’s also recommended to keep a close track of all your expenses related to your home office. Especially utility bills — your work may require a lot of electricity, and so forth.

3. Save more tax money

You can include other tax deductions in this form. These relate to:

  • Medical and dental insurance.
  • Work-related education: courses, degrees, and skills development.
  • Pension savings.
  • Business insurance — especially if you run a single-person LLC.
  • Credit card interest.
  • Office supplies.
  • Internet connection and phone bills.

Even expenses related to Covid-19 can be deducted.

FAQ

Now, a few popular questions about the IRS Schedule С 1040.
Customer:
What are other expenses on Schedule C?
Support:
Miscellaneous expenses imply bank fees, membership costs, investing in your professional education, buying gasoline for your truck, etc.
Customer:
How much of your cell phone bill can you deduct?
Support:
You can deduct about 30% percent of your phone bill.
Customer:
How do I prove my Schedule C income?
Support:
It depends on various factors. Your clients should file the 1099-MISC form to report how much money they paid for your services/goods, etc. See the IRS tips for more info.
Customer:
Can I file Schedule C online?
Support:
Yes, as well as any other tax form.
Customer:
What are tax schedules?
Support:
A tax schedule is a specific tax form, which you must file according to your income situation. This is why as a sole proprietor, you should file 1040 Schedule C.
Printable Blank Schedule C (Form 1040)