Schedule C
- The Purpose of Schedule C
- Schedule C Expenses
- Deducting a Net Loss Reported on Schedule C
- Preparing Schedule C
- Business Deductions Claimed on Form 1040 Instead of Schedule C
- Closing a Sole Proprietorship
More Tax Topics
- Business Structures
- Start-up Costs
- Depreciation
- Car Expenses
- Home Office Deduction
- Travel Expenses
- Hiring Workers
- Meals and Entertainment
- Retirement
- Top Tax Myths
- Per Diem Rates - IRS Publication 1542 Oct 2011 for Travel Within the Continental U.S (for employers who pay a per diem allowance to employees)
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Updated for 2011
Expenses Listed on Schedule C
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Explanation of Certain Schedule C Expenses
Line 14: Employee benefit programs (other than on line 19)
Examples of benefit programs associated with line 14:
- Accident and health plans
- Group-term life insurance
- Dependent care assistance programs
- If you made contributions on your behalf as a self-employed person to a dependent care assistance program, complete Form 2441, Parts I and III to figure your deductible contributions to that program.
- You cannot deduct contributions you made on your behalf as a self-employed person for group-term life insurance.
Line 15: Insurance (other than health)
Reminder: DO NOT include health insurance premiums on line 15 if you're:
- Self-employed (sole proprietor, partner, LLC member, where LLC is taxed as a partnership) or
- A more-than-2 percent shareholder in an S-corporation.
If you're any of the above, deduct the Self-employed health insurance deduction on Line 29 of Form 1040.
Examples of what to include on line 15:
- Business liability
- Business interruption
- workers' compensation (does not apply if you are self-employed and have no employees)
Line 19: Pension and profit-sharing plans
Employees:
Enter your deduction for contributions you made for the benefit of your employees (not your own) to a pension, profit-sharing, annuity plan, or other plan.
Self-employed persons:
If the plan included you as a self-employed person, enter contributions made for yourself on Form 1040, line 28 or Form 1040NR, line 27, not on Schedule C.
- Form 5500-EZ (Form
5500-EZ instructions)
- File this form for a one-participant plan. This is a plan that covers only you (or you and your spouse).
- Form 5500 (Form 5500 instructions)
- File this form if the plan is not a one-participant plan.
Line 23: Taxes and licenses
You can deduct:
- Federal Unemployment Taxes.
- These taxes are not withheld from the wages of employees.
- Only the employer pays unemployment taxes.
- Employer's share of FICA taxes
- These are social security and Medicare taxes.
- The employee pays one-half and the employer pays one-half.
- The employer's deducts his/her half on this line.
- State unemployment taxes
- State unemployment taxes are not paid by employees.
- The employers pays this tax based on a percentage of the employee's gross wages (e.g., it's usually paid the first $7,000).
- Tip: To keep your experience low, keep your turnover low or successfully defeat a claim by an ex-employee when you feel your justified.
Line 27: Other expenses
Line 27 is used as a catch-all for expenses not preprinted on Schedule C.
Use Part V of Schedule C to enter the description and amount of each expense you had that didn't fit in to any of the preprinted expense items listed on Schedule C.
Add up these items up then carry the total to Part II, Line 27.
Examples of other expenses include:
- Amortization (see note below)
- Bank fees
- Books related to your business or profession
- Dues to professional societies
- Gifts ($25 limit)
- Information services
- Subscriptions
- Trade publications and professional journals
Note: Amortization
Complete Form 4562 for amortization that begins in the current tax year.
Examples of amortizable items:
Business start-up costs and Section 197 intangibles are amortized.
Section 197 intangibles are intangible assets acquired in connection with the purchase of a business. They are amortized over 15 years.
Examples of Section 197 intangibles:
- Goodwill
- covenant not to compete
- Franchises
- Trademarks
- Trade names
- Copyrights
- Patents
- Formula
- Process
- Format
- Customer lists
- Subscription lists
- Lists of advertisers: radio, T.V., newspapers, magazines
- Interest on business debt
- Leasing costs for equipment
- Licenses and fees to government agencies
- Merchant authorization fees for credit card payments
- Repairs and maintenance of office facility and equipment
- Shipping and postage
- Storage fees
Related Links
- Sole Proprietorships
- The Purpose of Schedule C
- Who Must File Schedule C?
- More Than One Business
- List of Schedule C Expenses
- Components of Schedule C
- Schedule C-Page 1, Top Section
- Schedule C-Page 1, Part I: Income
- Schedule C-Page 1, Part II: Expenses
- Deducting the Home Office Deduction on Schedule C
- Schedule C-Page 2, Part III: Cost of Goods Sold
- Part IV: Information on Your Vehicle
- Part V: Other Expenses
- Form 1040 Deductions
- Closing Your Sole Proprietorship
- Reopening Your Business in a Later Year
- Closing Your Business When You Have Employees
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