Preparing a Schedule C- self employment or business expenses

At a VITA tax site, the tax preparer can assist the tax payer in filling out their Schedule C for their taxes. However, ultimately it is up to the taxpayer to have all of the information for the Schedule C and determine if the expense will go on the Schedule C. The tax payer should NOT ask the tax preparer if the expense is allowed, that is for the tax payer to determine.

For IRS guidelines a legitimate allowed expense would be considered "necessary and ordinary" for running the business.

Below are the steps in creating a Schedule C. If you have self employment income, please be prepared prior to your appointment with all of this information or we may not be able to complete your tax filing.

Please read carefully to understand what a VITA site can and cannot file for a Schedule C.

Gather all income sources (Part I)

          1099-NEC, 1099-MISC, 1099-K

         Other income like cash, check, venmo (not reported elsewhere)

Gather all expense documents (Part II)

         Business expenses can include advertising, supplies, etc. Some things are not allowed for VITA like home office use and expenses over $50,000

         Retain documentation

If you sell products (Part III)- this is out of scope for VITA services

     Include inventory changes, cost of inventory, and purchases

If you claim vehicle use (Part IV)

         Provide details about the vehicle including mileage for business, commuting, etc. Actual expenses are out of scope for VITA, only mileage is allowed

          Retain documentation

Calculate Net Profit or Loss

          Total Expenses - Gross Income =

Net loss is out of scope for VITA

          Add the profit to Form 1040 Schedule 1 Line 3

          Attach to your Form 1040 when filing