Schedule C of Form 1040

Author: Allison McLeod

Many self-employed or sole proprietors find themselves having to navigate Schedule C in reporting business income. While this attachment to Form 1040 seems straightforward on the surface, there are many traps for the unwary.

Publication Date: August 2019

Designed For
CPAs, EAs, or other tax professionals.

Topics Covered

• Who should be filing Schedule C
• Difference between the cash and accrual method
• Correct period in which taxpayers must recognize income and/or deductions
• Reporting the deduction of self-employed health insurance
• Employment taxes
• Home office deductions
• Proper reporting of employee/independent contractor salaries and retirement contributions
• Methods of deducting the cost of a company car
• Section 179 & bonus depreciation
• Net Operating Losses
• Excess Business Losses
• Credits

Learning Objectives

• Identify the appropriate taxpayers who should be filing Schedule C
• Differentiate between the cash and accrual method, and the correct period in which taxpayers must recognize income and/or deductions
• Recognize related issues, such as reporting the deduction of self-employed health insurance, employment taxes, home office deductions, and proper reporting of employee/independent contractor salaries, and retirement contributions
• Describe types of typical deductions, such as advertising, utilities, supplies, etc.
• Identify the methods of deducting the cost of a company car
• Recognize how to apply the rules, such as Section 179 or bonus depreciation, which permit the immediate expensing of some or all of the cost of certain assets
• Identify the required criteria before a taxpayer can deduct expenses
• Describe Net Operating Losses (NOLs)
• Recognize true statements about Excess Business Losses (EBL)

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None