The Internal Revenue Service requires people who are in business for themselves to use Schedule C when filing taxes to report their business income. These include sole proprietors -- including spouses who jointly own the company, both participate in the company, and file a joint return -- as well as independent contractors and statutory employees. Schedule C shows all of the income and expenses for the business during the year. You must file an income tax return if your self-employment income exceeds $400, because you will owe self-employment taxes.
Schedule C-EZ Alternative
If your business made a profit and meets certain other requirements, you can file a shorter Schedule C-EZ instead of the full Schedule C. To qualify, your expenses can't exceed $5,000, you can't have any employees or inventory, and you can't be depreciating or deducting the cost of your home as a business expense.
If you're in business for yourself but you work with others, such as in a partnership or S corporation, you report your business income and expenses on Schedule E instead of Schedule C. You also use Schedule E for rental income and expenses.
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