How to read Schedule C (Profit or Loss From Business)?

A Schedule C on a 1040 tax form is used to report income or loss from a business you operated or a profession you practiced as a sole proprietor. It includes sections for gross income, total expenses, and the net profit or loss from the business.

Here are the most important sections of form Schedule C

PART 1

Line 7 is your Gross income. To determine your taxable income we will deduct all applicable expenses from this number.

PART 2

Line 28 Total expenses

Line 30 Expenses for business use of your home, these are expenses you can deduct by using a portion of your home as your workspace.

Line 31 Net profit or (loss). If you’re a schedule C, this will be calculated into your taxable income.