Schedule C

Out of Scope by [line number]:
  • Not materially participating in the business
  • Expenses exceed income (net business loss)
  • Expense for contract labor
  • Expenses over $25,000
  • Actual expense calculation for car/truck use
  • Hobby or Not-for-profit activity
  • Anything involving depreciation, depletion or amortization
  • Returns and allowances
  • Cost of goods sold
  • Casualty losses
  • Vehicle rental or lease expenses of more than 30 days
  • Schedule C > Income > Other income
  • Any bartering transactions
  • Installment sales income (Form 6252)
  • Business had inventory during the year
  • Used other than cash method of accounting (i.e., accrual method)
  • Expenses for employees
  • Business requires filing of any Form 1099
  • Business use of home (including Simplified Home Office Deduction)
  • Has prior-year unallowed passive activity losses
  • Receipt of credit card (or similar) payments that are not all income
  • General Business Credit (Form 3800)

Is it a business?

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 or a hobby does not qualify as a business. For further discussion and examples, go here.

To report income from a nonbusiness activity, use Form 1040, line 21. (i.e. Federal Section > Income > Other Income > Other Inc. Not Reported elsewhere TS page)

If the taxpayer received a 1099-MISC with an amount in Box 7 (Nonemployee compensation) and it is not self-employment, then enter the Box 7 amount as Box 3 (Other income) instead.

Tax Slayer entry:

Federal Section > Income > Profit or Loss From A Business

Basic Information About Your Business

  • You can use the Business Activity Code link provided by Tax Slayer or the Business Code tool.



  • Include the amounts from Forms 1099-K in with other gross receipts on line 1.
  • Any adjustment to amount on Form 1099-K is OUT OF SCOPE.

Family Caregivers:

  • If the taxpayer received a 1099-MISC with an amount in box 7 (non-employee compensation) for care of a family member, it is reported as self-employment income only if the taxpayer is engaged in a care-giving trade. If not, it is reported as Other Income on 1040 line 21.
  • If engaged in a care-giving trade, it may be deducted as a business expense unless it is for care of more than 5 adults or 10 children.

Uber/Lyft drivers:

Drivers will receive one of more of the following documents:

  • 1099-K
    • Box 1a of the 1099-K is entered on line 1 of the SCH C – there is no 1099-K form in TaxSlayer.
  • 1099- MISC for payments they received from the company for referring new drivers.
  • Year End Statement/Tax Summary. This shows income and expenses assessed or deducted by Uber/Lyft. Make sure it matches the 1099-K and/or 1099-MISC.

Drivers probably have other expenses they can deduct on their SCH C, for example:

  • Bottled water, snacks and amenities for customers
  • Mobile phone expenses used for business
  • Mileage while driving around waiting for a customer (Uber/Lyft only report the mileage on their statements while a customer was in the car)
  • Business taxes and licenses
  • Out-of-pocket city and airport fees
  • Out-of-pocket freeway, highway, and bridge tolls
  • Electronic toll transponder
  • Office supplies

General Expenses:

NEW IN 2018: Self-employed taxpayers with Medicare or private health insurance may now claim the health insurance deduction on Form 1040 line S1-29 for any open tax year. Enter on Federal Section > Income > Profit or Loss From A Business Schedule C > General Expenses > Health Insurance. Any amount not offsetting business income will automatically carry to Schedule A.

  • All allowable business expenses must be claimed.
  • We cannot adjust business expenses to put the return in-scope or to maximize EIC or other benefits.
  • Clothing must be unique for the business (special protective or identity clothing)
  • Expenses that don’t fit a provided category can be enumerated in the Other Expenses TS page.
  • ⚠ CAUTION : For 2015-2017 only, if you worked for someone else as an employee, expenses go on Schedule A (Federal Section > Deductions > Itemized Deductions > Unreimbursed Employee Business Expense)

Car and Truck Expenses:

  • We can prepare returns using the standard mileage rate only.
  • And, the business portion of the ownership tax and car loan payment interest can be deducted on Schedule C. (The personal use portion of ownership tax can be deducted on Schedule A but not the interest.)
  • Which trips are deductible? See the travel map.
  • Actual expenses should include depreciation and are thus OUT OF SCOPE.