Schedule C

Schedule C — formally “Profit or Loss from Business (Sole Proprietorship)” — is the IRS form that freelancers, independent contractors, gig workers, and sole proprietors use to report their business income and deductible expenses. It attaches to your Form 1040 and determines your net profit (or loss) from self-employment.

Who files Schedule C

You file Schedule C if you:

• Receive a Form 1099-NEC (non-employee compensation)
• Operate a business as a sole proprietor
• Drive for Uber, DoorDash, Instacart, or similar gig platforms
• Freelance as a designer, writer, consultant, developer, or in any other capacity
• Operate a single-member LLC that has not elected to be taxed as an S-Corp

If your business is an S-Corporation, you file Form 1120-S (not Schedule C). If it’s a multi-member LLC treated as a partnership, you file Form 1065 and pass K-1s to the individual 1040s.

What Schedule C covers

Schedule C has five main parts:

1. Part I — Income. Gross receipts from your business, minus returns and allowances.
2. Part II — Expenses. Deductible business expenses including: advertising, car and truck expenses (mileage), commissions, home office, insurance, legal fees, office expenses, rent, repairs, supplies, travel, meals (50%), utilities, wages paid to employees, and other ordinary and necessary business expenses.
3. Part III — Cost of goods sold. For product-based businesses.
4. Part IV — Vehicle information. Required if you claim vehicle expenses.
5. Part V — Other expenses. Any deductible expense not covered in Part II.

Your net profit (Part I minus Part II) flows to Schedule SE for self-employment tax calculation and to Form 1040 as regular taxable income.

Why software selection matters for Schedule C

The “free” tier on most tax software does not include Schedule C — or charges a significant upgrade to access it. This is the central bait-and-switch in the consumer tax software market.

FreeTaxUSA and Cash App Taxes are the only consumer products that include Schedule C at the zero/near-zero federal tier.

Common Schedule C deductions

• Home office — simplified method: $5 per square foot, up to 300 sq ft ($1,500 max). Actual expense method: percentage of home used for business Ã- total home expenses.
• Mileage — 2026 standard rate (verify current IRS rate): track business miles separately from personal miles.
• Health insurance — self-employed health insurance premiums are deductible on Form 1040 Schedule 1, not Schedule C, but reduce adjusted gross income.
• Retirement contributions — SEP-IRA, SIMPLE IRA, or Solo 401(k) contributions reduce taxable income.
• Software and subscriptions — tools used exclusively for the business.
• Professional development — courses, books, conferences directly related to the business.