Schedule C on Form 1040

Owning Your Own Business: Schedule C on Form 1040

So you started an online business and make a few bucks a week selling exotic teas from around the world.  Who’s to know you’ve got some extra income?  You haven’t quit your day job and it’s just a few hundred dollars anyway. Will this change anything come tax season?  You betcha!  It’s business income, baby, and congratulations, now you must use the slightly longer 1040 form, rather than the IRS 1040 EZ.  Here’s how it works.

Business Income

Where is my tax refund

We’ve already mentioned capital gains as a form of income that will necessitate the use of the 1040 over the EZ form.  There’s also Business Income.  That’s a Sole Proprietorship, owned by you, that makes money.  Don’t worry: if it loses money the IRS still wants to know about it and they will adjust your income tax accordingly.

This is a one-page form that’s part of the 1040 package.  It’s called Schedule C, Profit or Loss From Business.  It works pretty much like pages one and two of form 1040.  First you write in the basic info about your business: address, what type of business it is, how you do your accounting, and what your role is.
Kentucky Business Tax Extension

Then it’s list the income, expenses, and the difference between the two.  You wind up with a dollar amount: the net profit or loss of your business.  That gets entered on line 12 of the first page of IRS Form 1040, and gets included in your total income, along wages or any other income you had that year.

Free Federal Taxes 2014