Updated October 16, 2026. Quick answer: Schedule C reports income or loss from a business you operated or a profession you practiced as a sole proprietor. Part I and Part II build to a net profit or loss on line 31, and a profit goes to Schedule 1 line 3 and to Schedule SE line 2. The 2025 instructions print a standard mileage rate of 70 cents per mile and send home office expenses to line 30, which takes the Form 8829 total or the simplified method.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for IT consultants, Schedule C code for personal trainers and Schedule C code for online sellers.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for consultants, Schedule C code for freelance writers and artists and Schedule C code for child care.
More IRS forms and schedules for individual filers, read line by line: Form 2106 standard mileage rate.
Related reading on this site: IRS Publication 463, IRS Publication 334 and IRS publications by number.
S corporation return (Form 1120-S) for 2025, read line by line: Form 1120-S Schedule K lines 1 to 4.
Partnership return (Form 1065) for 2025, read line by line: Form 1065 lines 1a to 3, Form 1065 lines 4 to 8 and Form 1065 lines 11 to 14.
IRS worksheets read line by line: EIC Worksheet B.
Business use of your home (Form 8829), the saver’s credit (Form 8880), clean vehicle credits (Form 8936) and amended returns (Form 1040-X), read line by line: Form 8829 lines 28 to 36, Form 8829 lines 37 to 44 and Form 8936 Parts II and V.
Sales of business property (Form 4797), passive activity losses (Form 8582) and depreciation (Form 4562) for 2025, read line by line: Form 4562 lines 6 to 13, Form 4562 lines 14 to 20 and Form 4562 lines 21 to 23.
Schedule D and Schedule E (Form 1040) for 2025, read line by line: Schedule E lines 3 and 4.
Schedule C and Schedule SE (Form 1040) for 2025, read line by line: Schedule C lines 12 and 13, Schedule C lines 14 and 15 and Schedule C lines 16a and 16b.
Schedule 2 (Form 1040) for 2025, read line by line: Schedule 2 line 4.
Schedule 1 (Form 1040) for 2025, read line by line: Schedule 1 lines 8a and 8b, Schedule 1 lines 8g to 8k and Schedule 1 lines 25 and 26.
Form 1040 for 2025, lines 12 to 38 read line by line: Form 1040 line 13 and Form 1040 line 27.
Form 1040 for 2025, read line by line: Form 1040 line 1b and Form 1040 line 1d.
The employee copy of Form W-2, read box by box: W-2 box 13 statutory employee.
The recipient copy of Form 1099-G or 1099-K, read box by box: 1099-G and 1099-K boxes explained, 1099-K box 1a and 1099-K boxes 1b, 2, 3.
The recipient copy of Form 1099-NEC or 1099-MISC, read box by box: 1099-NEC boxes 1b to 1d, 1099-NEC box 3 and 1099-MISC box 6.
The shareholder’s Schedule K-1 (Form 1120-S), boxes 13 to 19: Schedule K-1 boxes 18 and 19, Schedule K-1 box 17 code V and Schedule K-1 box 17 other codes.
The shareholder’s Schedule K-1 (Form 1120-S), read box by box: Schedule K-1 box 1 and Schedule K-1 box 12.
The partner’s Schedule K-1 (Form 1065), read box by box: Schedule K-1 box 12, Schedule K-1 box 14 and Schedule K-1 box 20 code Z.
The partner’s Schedule K-1 (Form 1065), read box by box: Schedule K-1 box 1, Schedule K-1 box 4 and Schedule K-1 box 7.
More IRS forms and schedules, read line by line: Form 8832 instructions.
Who files Schedule C
The 2025 instructions open with the purpose: “Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor.” The form itself carries a routing note: “Attach to Form 1040, 1040-SR, 1040-SS, 1040-NR, or 1041; partnerships must generally file Form 1065.”
Not every side activity counts. The instructions draw the line this way: “An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.” “For example, a sporadic activity, a not-for-profit activity, or a hobby does not qualify as a business.” The same section extends the schedule to some employee and information return situations: “Also, use Schedule C to report (a) wages and expenses you had as a statutory employee; (b) income and deductions of certain qualified joint ventures; and (c) certain amounts shown on a Form 1099, such as Form 1099-MISC, Form 1099-NEC, and Form 1099-K.”
Entity questions come up quickly. On a single owner LLC: “Generally, a single-member domestic LLC is not treated as a separate entity for federal income tax purposes.” “If you are the sole member of a domestic LLC, file Schedule C (or Schedule E or F, if applicable) unless you have elected to treat the domestic LLC as a corporation.” Spouses who run a business together are a separate topic in the instructions.
More than one business means more than one schedule: “If you owned more than one business, complete a separate Schedule C for each business.”
Line structure from Part I to Part V
The schedule is built so that each total feeds the next. The lines below are quoted from the form:
| Section | What the schedule says |
|---|---|
| Part I, Income | “Gross profit. Subtract line 4 from line 3”; “Gross income. Add lines 5 and 6” |
| Part II, Expenses | “Total expenses before expenses for business use of home. Add lines 8 through 27b” |
| Tentative result | “Tentative profit or (loss). Subtract line 28 from line 7” |
| Home line | “Expenses for business use of your home. Do not report these expenses elsewhere. Attach Form 8829 unless using the simplified method. See instructions.” |
| Net result | “Net profit or (loss). Subtract line 30 from line 29.” |
| Part III, Cost of goods sold | “Cost of goods sold. Subtract line 41 from line 40. Enter the result here and on line 4” |
| Part IV, Vehicle | “Complete this part only if you are claiming car or truck expenses on line 9 and are not required to file Form 4562 for this business.” |
| Part V, Other expenses | “List below business expenses not included on lines 8-27a, or line 30.” |
Income starts on line 1. The instructions say “Enter gross receipts from your trade or business.” and add a reconciliation duty: “If you received one or more Forms 1099-NEC, be sure line 1 includes amounts properly shown on your Forms 1099-NEC.” Line 6 picks up other income, and the instructions use it for a depreciation clawback: “If the business use percentage of any listed property (defined under Line 13, later) dropped to 50% or less in 2025, report on this line any recapture of excess depreciation, including any section 179 expense deduction.”
On the expense side, line 13 depreciation is defined this way: “Depreciation is the annual deduction allowed to recover the cost or other basis of business or investment property having a useful life substantially beyond the tax year.” Form 4562 is attached only in the cases the instructions list for line 13. On accounting method, “In all cases, the method used must clearly reflect income.”
Net profit, Schedule SE and Schedule 1
Line 31 is the figure the rest of the return uses. On the form, a profit is directed this way: “If a profit, enter on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2.” “If a loss, you must go to line 32.” The instructions repeat the routing for individuals: “Enter your net profit or loss on line 31 and include it on Schedule 1 (Form 1040), line 3. Also, include your net profit or loss on Schedule SE (Form 1040), line 2.” The same passage adds “However, if you are a statutory employee or notary public, see Statutory employees or Notary public, later.” For trusts and estates, the instructions say to include the net profit or loss on Form 1041, line 3.
Losses have steps first: “If your expenses (including the expenses you report on line 30) are more than your gross income, don’t enter your loss on line 31 until you have applied the at-risk rules and the passive activity loss rules.” On the at-risk side, “The at-risk rules generally limit the amount of loss (including loss on the disposition of assets) you can claim to the amount you could actually lose in the business.” The form’s two boxes read “All investment is at risk.” and “Some investment is not at risk.”, and the second sends the filer to Form 6198.
The following is an illustration with made-up amounts, not an IRS example, following the line order. It also shows the printed mileage rate applied to a made-up mileage figure:
| Step | Amount | Note |
|---|---|---|
| Gross income (line 7) | $80,000 | Illustration input |
| Total expenses before home (line 28) | $35,000 | Illustration input |
| Tentative profit (line 29) | $45,000 | Computed here: $80,000 minus $35,000 |
| Home expenses by the simplified method (line 30) | $1,000 | Computed here: 200 square feet times $5, a made-up area |
| Net profit (line 31) | $44,000 | Computed here: $45,000 minus $1,000 |
| Business miles at the printed 2025 rate, 8,000 miles | $5,600 | Computed here: 8,000 times 0.70, a made-up mileage |
Because the net profit also lands on Schedule SE line 2, it drives self-employment tax. The mechanics of that tax and the quarterly payments that go with it are on the self-employment tax page and the first year estimated taxes page.
The home office line and the simplified method
Line 30 is the pointer to the home office deduction. The instructions say “To claim a deduction for business use of your home, use Form 8829, or you can elect to determine the amount of the deduction using a simplified method.” When Form 8829 is used, “Instead, include the amount from line 36 of your Form 8829 on line 30.” The details of that form are on the Form 8829 page.
The simplified method is described as “an alternative to the calculation, allocation, and substantiation of actual expenses.” “In most cases, you’ll figure your deduction by multiplying the area (measured in square feet) used regularly and exclusively for business, regularly for daycare, or regularly for storage of inventory or product samples, by $5.” “The area you use to figure your deduction cannot exceed 300 square feet.” Two limits follow: “You can’t use the simplified method to figure a deduction for rental use of your home.” and “You choose whether or not to use the simplified method each tax year.” “An election for a year, once made, is irrevocable.”
2025 thresholds and What’s New items as printed
The 2025 instructions print several figures that small business owners look up. They are shown here as written, and each one has its own source section in the instructions:
| Item | As printed in the 2025 instructions |
|---|---|
| Standard mileage rate, 2025 | “For 2025, the standard mileage rate for the cost of operating your car for business use is 70 cents per mile.” |
| Small business taxpayer | “You qualify as a small business taxpayer if you (a) have average annual gross receipts of $31 million or less for the 3 prior tax years (indexed for inflation), and (b) are not a tax shelter (as defined in section 448(d)(3)).” |
| Section 179 limit | “Beginning in 2025, the maximum section 179 expense deduction is $2.5 million.” |
| Bonus depreciation | “Certain qualified property acquired and placed in service after January 19, 2025, can take a 100% bonus depreciation.” |
| Business meals | “The business meals deduction is 50%.” |
On the mileage rate, the instructions add rules: “You must use actual expenses if you used five or more vehicles simultaneously in your business (such as in fleet operations).” “Multiply the number of business miles driven by 0.70.” Part IV of the schedule collects vehicle facts when car or truck expenses are claimed on line 9 and Form 4562 is not required.
Some new deductions are not on Schedule C at all. For tips, the instructions say “The deduction is claimed on Schedule 1-A (Form 1040) not on your Schedule C.”
For retirement savings tied to this profit, see the solo 401(k) versus SEP IRA page for a sole proprietor. The edition read for this page is Schedule C (Form 1040) for 2025 and the 2025 Instructions for Schedule C, which are the revisions irs.gov served when they were read on 2026-10-16. They cover the 2025 return filed in 2026. A later year can change the mileage rate, the thresholds and the line numbers, so check the revision printed on the schedule you are filing.
Every Schedule C line and part page in one table
Each row links to the page that reads a line, group of lines or part of Schedule C. The right column is the summary each page carries.
| Page | What it covers |
|---|---|
| Schedule C Line 1: Gross Receipts or Sales (2025 Return) | How Schedule C line 1 works on the 2025 return: what gross receipts include, how Forms 1099-NEC and 1099-K fit, and the statutory employee box. |
| Schedule C Lines 2 to 5: Returns, COGS, Gross Profit (2025) | How Schedule C lines 2 to 5 work on the 2025 return: sales returns and allowances, line 3, cost of goods sold from line 42, and gross profit. |
| Schedule C Lines 6 and 7: Other and Gross Income (2025) | How Schedule C lines 6 and 7 work on the 2025 return: what counts as other business income, listed property recapture, and how gross income is added. |
| Schedule C Lines 8 and 9: Advertising, Car and Truck (2025) | How Schedule C lines 8 and 9 work on the 2025 return: advertising as a Part II expense, and car and truck costs by actual expenses or the standard mileage rate. |
| Schedule C Lines 10 and 11: Commissions, Contract Labor (2025) | How Schedule C lines 10 and 11 work on the 2025 return: commissions and fees, payments to contractors, and the Form 1099-NEC filing notes. |
| Schedule C Lines 12 and 13: Depletion, Depreciation (2025) | How Schedule C lines 12 and 13 work on the 2025 return: the depletion deduction, depreciation and section 179, when to attach Form 4562, and listed property. |
| Schedule C Lines 14 and 15: Benefits and Insurance (2025) | How Schedule C lines 14 and 15 work on the 2025 return: employee benefit programs, business insurance, and where your own health insurance goes. |
| Schedule C Lines 16a and 16b: Business Interest (2025) | How Schedule C lines 16a and 16b work on the 2025 return: business mortgage interest reported on Form 1098, other interest, and the Form 8990 limit. |
| Schedule C Lines 17 to 19: Legal, Office, Pension (2025) | How Schedule C lines 17, 18 and 19 work on the 2025 return: legal and professional fees, office expense, and employee retirement plan contributions. |
| Schedule C Lines 20 to 22: Rent, Repairs, Supplies (2025) | How Schedule C lines 20a, 20b, 21 and 22 work on the 2025 return: rent or lease costs, repairs and maintenance, and materials and supplies. |
| Schedule C Line 23: Taxes and Licenses (2025) | How Schedule C line 23 works on the 2025 return: the taxes and licenses you can deduct, and the taxes the instructions say to leave off this line. |
| Schedule C Lines 24a and 24b: Travel and Meals (2025) | How Schedule C lines 24a and 24b work on the 2025 return: business travel, the incidental expense method, and the percentage of business meals you can deduct. |
| Schedule C Lines 25 and 26: Utilities and Wages (2025) | How Schedule C lines 25 and 26 work on the 2025 return: business-only utilities, the phone line rule, and wages reduced by employment credits. |
| Schedule C Lines 27a to 29: Other Expenses, Tentative Profit | How Schedule C lines 27a to 29 work on the 2025 return: the energy deduction, other expenses from line 48, total expenses and tentative profit. |
| Schedule C Line 30: Business Use of Your Home (2025) | How Schedule C line 30 works on the 2025 return: Form 8829 or the simplified method, the square foot cap, the election rules and what stays on Schedule A. |
| Schedule C Lines 31 and 32: Net Profit or Loss (2025) | How Schedule C lines 31 and 32 work on the 2025 return: net profit or loss, where it is carried, and the at-risk boxes for a loss. |
| Schedule C Part III Lines 33 to 42: Cost of Goods Sold (2025) | How Schedule C Part III lines 33 to 42 work on the 2025 return: valuing inventory, lines 35 to 41, and the cost of goods sold that goes to line 4. |
| Schedule C Part IV Lines 43 to 47: Vehicle Information (2025) | How Schedule C Part IV lines 43 to 47 work on the 2025 return: who completes it, the miles on line 44, commuting, and the evidence questions. |
| Schedule C Part V Line 48: Other Expenses (2025 Return) | How Schedule C Part V line 48 works on the 2025 return: listing other business expenses, what to leave out, and the total that goes to line 27b. |
Common mistakes
- Reporting a hobby as a business. The instructions say a sporadic activity, a not-for-profit activity or a hobby does not qualify as a business, and they give a different place to report nonbusiness income.
- Entering a loss on line 31 before applying the at-risk and passive activity rules. The instructions say not to enter the loss until those rules have been applied, and the line 31 result can be smaller than the subtraction suggests.
- Deducting home expenses somewhere other than line 30. The schedule says not to report them elsewhere, and line 30 takes either the Form 8829 line 36 amount or the simplified method amount.
Related: Form 8829 home office instructions, self-employment tax explained, first year self-employed estimated taxes, and solo 401(k) versus SEP IRA for a sole proprietor.
Sources
- Schedule C (Form 1040) (2025), Profit or Loss From Business: https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
- 2025 Instructions for Schedule C (Form 1040): https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
Read from the IRS documents linked above on October 16, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.