How to report income on Schedule C

Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if:

• Your primary purpose for engaging in the activity is for income or profit.
• You are involved in the activity with continuity and regularity.

For more information on Schedule C please refer to the IRS About Schedule C. 

Information you’ll need:

• Your business income statement
• Receipts for your business expenses, rent, repairs, travel, supplies, etc. 
• Inventory records, if applicable 
• Mileage and other vehicle records if applicable 

The Schedule C consists of five parts:

Part l. INCOME - Note: Be sure to check any 1099 Form you receive for business income that must be reported on this line.

When filing Schedule C (Profit or Loss from Business) as part of your tax return, you generally include income reported on various 1099 forms. Here’s a rundown of the 1099 forms that you might need to consider:

1. 1. Form 1099-NEC (Nonemployee Compensation):
      • This form reports payments made to independent contractors or self-employed individuals. If you received nonemployee compensation for services performed, you should include this income on Schedule C.
   2. Form 1099-MISC (Miscellaneous Income):
      • This form is used for a variety of types of income, including rent, royalties, and payments for services that don’t fall under the nonemployee compensation category. If you received miscellaneous income reported on a 1099-MISC that pertains to your business activities, it should be included on Schedule C.
   3. Form 1099-K (Payment Card and Third Party Network Transactions):
      • This form reports payments you received through credit cards or third-party payment networks (like PayPal) if they exceed a certain threshold. If you receive payments through these platforms, you should report the income from Form 1099-K on Schedule C.
   4. Form 1099-B (Proceeds from Broker and Barter Exchange Transactions):
      • While this form primarily reports capital gains and losses from securities transactions, if your business involves trading or investments, the proceeds might need to be reported on Schedule C.
   5. Form 1099-C (Cancellation of Debt):
      • This form reports canceled debts. If the canceled debt was related to your business, you may need to include this income on Schedule C.
   6. Form 1099-R (Distributions from Pensions, Annuities, Retirement, etc.):
      • If you received a distribution from a retirement account related to your business activities, you may need to report this on Schedule C.

In summary, you should review each 1099 form you receive and determine if the income reported relates to your business activities. The total amount of income reported on these forms should be included in the appropriate section of Schedule C. If you’re unsure about how to handle specific forms or income, consulting with a tax professional is always a good idea to ensure accurate reporting and compliance.

Part ll. EXPENSES
Part lll. COST OF GOODS SOLD 
Part lV. INFORMATION ON YOUR VEHICLE (If Applicable)
Part V. OTHER EXPENSES