Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

No items found.

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

Heading

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Schedule C (Form 1040): Profit or Loss From Business

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Frequently Asked Questions

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

Schedule C (Form 1040) is the tax form used to report income or loss from a business you operated or a profession you practiced as a sole proprietor during the 2015 tax year. Think of it as your business's report card to the IRS—it shows how much money your business made (or lost) and what expenses you incurred while running it.

You'll use Schedule C if you worked for yourself, whether you're a freelance graphic designer, a rideshare driver, an independent consultant, or run any other type of unincorporated business. The form is also used by statutory employees (certain types of workers who receive W-2s but can deduct business expenses), qualified joint ventures operated by married couples, and those reporting certain income shown on Form 1099-MISC.

The key requirement is that your activity qualifies as a legitimate business—meaning your primary purpose is earning income or profit, and you're engaged in the activity with continuity and regularity. A sporadic activity or hobby doesn't count.
If you're just selling items from your attic on eBay once in a while, that's not a business; if you're regularly buying and reselling products online with the intention of making profit, that's a business requiring Schedule C.

Source: IRS Instructions for Schedule C (2015)

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

For the 2015 tax year, Schedule C was due along with your Form 1040 by April 18, 2016 (not the usual April 15 due to holidays). If you requested an extension, you had until October 17, 2016 to file.

Late Filing

If you missed the deadline entirely and never filed, you should file as soon as possible. The IRS can assess:

Failure-to-file penalty: 5% of unpaid taxes per month (up to 25%)
Failure-to-pay penalty: 0.5% per month

Even if you can’t pay, file the return—the failure-to-file penalty is steeper.

Amended Returns

If you discover an error after filing, use Form 1040-X (Amended U.S. Individual Income Tax Return) to correct it.
Common reasons to amend include:

Forgetting to report income
Discovering deductible expenses later
Fixing math errors

You generally have three years from the original filing date or two years from when you paid the tax (whichever is later) to amend for a refund.
For 2015 returns filed by April 18, 2016, the amendment deadline for refunds was April 18, 2019.

Source: IRS Topic 308

Key Rules for 2015

Standard Mileage Rate

If you drove for business, you could deduct 57.5¢ per mile using the standard mileage rate instead of tracking actual expenses.

Section 179 Expensing

You could immediately deduct up to $25,000 of qualifying business property instead of depreciating it.

Accounting Methods

Choose either:

Cash method: Report income when received, expenses when paid.
Accrual method: Report income when earned, expenses when incurred.

Most small businesses use the cash method. If you had inventory, accrual was typically required.

Simplified Home Office Deduction

Deduct $5 per square foot, up to 300 sq. ft. (maximum $1,500) without tracking actual expenses.

Material Participation

To avoid passive loss limits, you must “materially participate.”
You meet this if, for example, you worked more than 500 hours in the business during 2015.
If not, your ability to deduct losses may be limited.

Source: IRS Instructions for Schedule C (2015)

Step-by-Step (High Level)

Part I – Business Information

Provide:

Business name and address
Principal business code
Accounting method
Whether you materially participated
Whether the business started in 2015

Part II – Income

Report gross receipts (line 1)
Subtract returns and allowances (line 2)
For products, complete Part III (Cost of Goods Sold)
Add other income (line 6) and total to determine gross income

Part III – Expenses

List all business expenses (lines 8–27), including:

Advertising
Car/truck expenses
Depreciation
Insurance, legal, and professional fees
Office supplies, rent, repairs, taxes, travel, utilities, wages

Only deduct ordinary and necessary business costs—no personal expenses.

Part IV – Vehicle Information

If claiming vehicle expenses, report:

Date placed in service
Business vs. personal mileage
Proof of records
Whether vehicle was available for personal use

Part V – Other Expenses

List additional items like:

Bank fees
Business memberships
Professional education

Final Calculation

Subtract total expenses (line 28) from gross income (line 7) → Net profit or loss (line 31)

Profit: Goes to Form 1040, line 12 and Schedule SE
Loss: May be limited by passive activity or at-risk rules

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Keep separate accounts and only deduct expenses that are ordinary and necessary.

Missing or Incorrect 1099 Income

Ensure your gross receipts match or exceed your total 1099-MISC income.
Attach an explanation if there’s a timing difference.

Improper Home Office Deduction

Your workspace must be used regularly and exclusively for business.
Use the simplified $5/sq. ft. method or file Form 8829 for actual expenses.

Vehicle Expense Errors

Choose either standard mileage or actual expenses—not both.
Maintain a detailed mileage log with dates, destinations, and purposes.

Forgetting Estimated Tax Payments

Self-employed taxpayers must make quarterly estimated payments using Form 1040-ES to avoid penalties.

Passive Activity Loss Limitations

If you didn’t materially participate (line G = “No”), complete Form 8582 to see how much loss is deductible.
If you borrowed funds without personal liability, complete Form 6198 (at-risk rules).

Capital vs. Current Expenses

Large purchases (e.g., vehicles, machinery) must be depreciated using Form 4562.
Repairs and maintenance are immediately deductible.

Source: IRS Instructions for Schedule C (2015)

What Happens After You File

Processing Your Return

The IRS matches your Schedule C income against 1099s and W-2s.
If all data aligns, refunds for e-filed returns usually arrive within weeks; paper returns take longer.

Self-Employment Tax

Your net profit is subject to self-employment tax (Social Security + Medicare):

15.3% on the first $118,500 of net earnings (12.4% + 2.9%)
Additional 2.9% on amounts above that

You can deduct half of this tax on Form 1040, line 27.

Audit Potential

Schedule C filers face higher audit rates—especially those reporting losses repeatedly.
The IRS typically audits within 3 years.
Keep all supporting records for at least three years (longer for property-related records).

Information Returns

If you paid any contractor $600+ in 2015, you had to issue Form 1099-MISC by Jan 31, 2016.
Failure to file can result in $50–$270 per form penalties.

Estimated Taxes for Next Year

Use 2015 results to project 2016 estimated taxes.
If you expect to owe $1,000+, make quarterly estimated payments to avoid penalties.

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

Yes. Report W-2 wages normally and Schedule C income separately.
You’ll owe self-employment tax on your net business profit.

What if my business lost money in 2015?

Report the loss on line 31 as a negative number.
It can offset other income but may be limited by passive or at-risk rules.
Repeated losses could trigger IRS scrutiny for hobby status.

Do I need a business license or EIN to file Schedule C?

No. You can use your Social Security Number unless you have employees, certain plans, or excise tax filings requiring an EIN.
Local business license rules vary by state or municipality.

Can my spouse and I both file Schedule C for the same business?

Usually, joint owners are treated as a partnership (Form 1065).
However, you can elect a qualified joint venture if both materially participate and file jointly—each files their own Schedule C.

What’s the difference between Schedule C and Schedule C-EZ?

You can use Schedule C-EZ only if:

Expenses ≤ $5,000
Cash method used
No inventory, depreciation, or employees
Only one business

Most filers don’t qualify for C-EZ.

How long should I keep my Schedule C records?

Keep for 3 years after filing.
Keep for 6 years if underreporting income by 25%+.
Keep property records for at least 3 years after disposing of assets.

What happens if I forget to report some income or expenses?

File Form 1040-X within 3 years of the original filing.
If the IRS finds discrepancies, you’ll receive a CP2000 notice.
Always respond promptly and correct any errors to avoid penalties.

References and Resources

Schedule C Form 2015 (IRS.gov)
Schedule C Instructions 2015 (IRS.gov)
IRS Small Business & Self-Employed Tax Center

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

Late Filing

Amended Returns

Key Rules for 2015

Standard Mileage Rate

Section 179 Expensing

Accounting Methods

Simplified Home Office Deduction

Material Participation

Step-by-Step (High Level)

Part I – Business Information

Part II – Income

Part III – Expenses

Part IV – Vehicle Information

Part V – Other Expenses

Final Calculation

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Missing or Incorrect 1099 Income

Improper Home Office Deduction

Vehicle Expense Errors

Forgetting Estimated Tax Payments

Passive Activity Loss Limitations

Capital vs. Current Expenses

What Happens After You File

Processing Your Return

Self-Employment Tax

Audit Potential

Information Returns

Estimated Taxes for Next Year

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?

What if my business lost money in 2015?

Do I need a business license or EIN to file Schedule C?

Can my spouse and I both file Schedule C for the same business?

What’s the difference between Schedule C and Schedule C-EZ?

How long should I keep my Schedule C records?

What happens if I forget to report some income or expenses?

References and Resources

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Frequently Asked Questions

Related Articles

Schedule C (Form 1040): Profit or Loss From Business

What the Form Is For

When You’d Use It (Late/Amended Filing)

Original Filing Deadline

Late Filing

Amended Returns

Key Rules for 2015

Standard Mileage Rate

Section 179 Expensing

Accounting Methods

Simplified Home Office Deduction

Material Participation

Step-by-Step (High Level)

Part I – Business Information

Part II – Income

Part III – Expenses

Part IV – Vehicle Information

Part V – Other Expenses

Final Calculation

Common Mistakes and How to Avoid Them

Mixing Personal and Business Expenses

Missing or Incorrect 1099 Income

Improper Home Office Deduction

Vehicle Expense Errors

Forgetting Estimated Tax Payments

Passive Activity Loss Limitations

Capital vs. Current Expenses

What Happens After You File

Processing Your Return

Self-Employment Tax

Audit Potential

Information Returns

Estimated Taxes for Next Year

Frequently Asked Questions

Can I file Schedule C if I have a full-time job with W-2 income?