Updated October 18, 2026. Quick answer: Line 31 is your net profit or loss: line 29 minus line 30. A profit is entered on Schedule 1 line 3 and on Schedule SE line 2, while a loss sends you to line 32 to say whether all of your investment is at risk. Special rules apply to a loss, to statutory employees and to notaries.
Picking the Schedule C business code for your work (2025 chart): Schedule C code for doctors and dentists.
IRS worksheets read line by line: Schedule 8812 Earned Income Worksheet.
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 1 to 7, Form 8829 lines 37 to 44 and Form 8936 Parts II and V.
What lines 31 and 32 ask for
The form captions line 31 as “Net profit or (loss). Subtract line 30 from line 29.” It gives two directions: “If a profit, enter on both Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2.” and “If a loss, you must go to line 32.” Line 32 asks “If you have a loss, check the box that describes your investment in this activity.” The schedule is mapped on the Schedule C (Form 1040) page.
Where the number comes from: line 31
The instructions give the basic arithmetic: “If your gross income is more than your expenses (including the expenses you report on line 30) and you don’t have prior year unallowed passive activity losses, subtract line 30 from line 29.” “The result is your net profit.”
A loss is more cautious: “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. The instructions add that after those rules “the amount on line 31 will be your loss, and it may be smaller than the amount you figured by subtracting line 30 from line 29.”
Computed illustration, not an IRS example: if line 29 is $18,000 and line 30 is $2,500 then line 31 is computed as $18,000 minus $2,500 which is $15,500.
Passive activity and excess business loss
If you have a profit but also prior unused passive losses, the instructions say not to enter the profit until you have used “Form 8582 to figure the amount of prior year unallowed passive activity losses you may include on line 31.” On rentals: “Unless you are a qualifying real estate professional, a rental real estate activity is a passive activity even if you materially participated in the activity.” The general limit is stated as “In general, a business activity in which you do not materially participate or a rental activity is a passive activity and you have to use Form 8582 to apply a limitation that may reduce the loss, if any, that you may enter on Schedule C, line 31.”
The instructions also say “If you enter a loss on line 31, you may have an excess business loss. Use Form 461 to figure your excess business loss.”
Line 32: the at-risk boxes
The instructions open the line with “You don’t need to complete line 32 if line 7 is more than the total of lines 28 and 30.” So with a profit, line 32 is skipped. For a loss, they say “In most cases, if you have a business loss and amounts invested in the business for which you are not at risk, complete Form 6198 to apply a limitation that may reduce your loss.” 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.”
Check box 32a when all of it is at risk: “If all amounts are at risk in this business, check box 32a.” The form words the boxes as “All investment is at risk.” and “Some investment is not at risk.” For 32b the instructions say “Be sure to attach Form 6198 to your return.” and the form says “If you checked 32b, you must attach Form 6198. Your loss may be limited.” Missing paperwork has a cost: “If you checked box 32b because some investment is not at risk and you do not attach Form 6198, the processing of your return may be delayed.”
Where it goes next
For an individual the instructions say “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.” That is the self-employment tax calculation explained at the Schedule SE (Form 1040) page, and the tax itself lands on Schedule 2, explained at Schedule 2 line 4. The instructions add “See the Instructions for Schedule SE (Form 1040) for details.” Half of the tax has its own line on Schedule 1, covered on the Schedule 1 lines 15 and 16 page.
Other filers differ. Trusts and estates: “Enter the net profit or loss on line 31 and include it on Form 1041, line 3.” Statutory employees: “However, do not report this amount on Schedule SE (Form 1040), line 2.” Notaries: “Do not enter your net profit from line 31 on Schedule SE (Form 1040), line 2, unless you are required to file Schedule SE (Form 1040) because you have other” self-employment income. Each of these has further conditions in the instructions, so read the paragraph for your status.
One more use of the profit: “If you have a net profit on line 31, this amount is earned income and may qualify you for the EIC.” The return the profit flows into is explained on the Form 1040 page.
Edition and line numbers
This page reads the 2025 Schedule C (Form 1040) and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are byte-identical to the archived copies and they are the files for the tax year 2025 return, filed in 2026. The schedule says “Attach to Form 1040, 1040-SR, 1040-SS, 1040-NR, or 1041”; “partnerships must generally file Form 1065.” Schedule C has its own instructions booklet, titled “Instructions for Schedule C” (Form 1040). Check the tax year printed on the schedule you are filling in and use the line numbers on that year’s schedule, because a different year’s schedule can number or word its lines differently.
Common mistakes
- Entering a loss on line 31 before applying the limits. The instructions say “don’t enter your loss on line 31 until you have applied the” at-risk rules and the passive activity loss rules.
- Checking box 32b without Form 6198. The form says “If you checked 32b, you must attach Form 6198. Your loss may be limited.”
- Sending a statutory employee’s amount to Schedule SE. The instructions say “However, do not report this amount on Schedule SE (Form 1040), line 2.”
Related: Schedule C (Form 1040), Schedule 2 line 4, Schedule 1 lines 15 and 16, Form 1040, and self-employment tax explained.
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Answer againSources
- Instructions for Schedule C (Form 1040), Profit or Loss From Business (2025): https://www.irs.gov/pub/irs-pdf/i1040sc.pdf
- Schedule C (Form 1040), Profit or Loss From Business (2025): https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
Read from the IRS documents linked above on October 18, 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.