Schedule C

Out of Scope:

  • Not materially participating in the business
  • Expenses exceed income (net business loss)
  • 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
  • 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)
  • Medical expense income adjustment on Form 1040
  • Self-employed health coverage deductions for the ACA premium tax credit (new in 2014)


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. 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)


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.

Income:

1099-Ks:

  • 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.

General Expenses:

  • 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.
  • 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.
  • Which trips are deductible? See the travel map.
  • Actual expenses should include depreciation and are thus OUT OF SCOPE.