Bankrate follows a strict editorial policy, so you can trust that
we’re putting your interests first. Our award-winning editors and
reporters create honest and accurate content to help you make the
right financial decisions.
Key Principles
We value your trust. Our mission is to provide readers with
accurate and unbiased information, and we have editorial standards
in place to ensure that happens. Our editors and reporters
thoroughly fact-check editorial content to ensure the information
you’re reading is accurate. We maintain a firewall between our
advertisers and our editorial team. Our editorial team does not
receive direct compensation from our advertisers.
Editorial Independence
Bankrate’s editorial team writes on behalf of YOU – the reader.
Our goal is to give you the best advice to help you make smart
personal finance decisions. We follow strict guidelines to ensure
that our editorial content is not influenced by advertisers. Our
editorial team receives no direct compensation from advertisers,
and our content is thoroughly fact-checked to ensure accuracy. So,
whether you’re reading an article or a review, you can trust that
you’re getting credible and dependable information.
You have money questions. Bankrate has answers. Our experts have
been helping you master your money for over four decades. We
continually strive to provide consumers with the expert advice and
tools needed to succeed throughout life’s financial journey.
Bankrate follows a strict editorial policy, so you can trust that
our content is honest and accurate. Our award-winning editors and
reporters create honest and accurate content to help you make the
right financial decisions. The content created by our editorial
staff is objective, factual, and not influenced by our
advertisers.
We’re transparent about how we are able to bring quality content,
competitive rates, and useful tools to you by explaining how we
make money.
Bankrate.com is an independent, advertising-supported publisher
and comparison service. We are compensated in exchange for
placement of sponsored products and, services, or by you clicking
on certain links posted on our site. Therefore, this compensation
may impact how, where and in what order products appear within
listing categories. Other factors, such as our own proprietary
website rules and whether a product is offered in your area or at
your self-selected credit score range can also impact how and
where products appear on this site. While we strive to provide a
wide range offers, Bankrate does not include information about
every financial or credit product or service.
Even if your self-employment income isn’t very much, you still have to report it to the Internal Revenue Service.
But depending upon your earnings and expenses, you may be able to file a much simpler form.
New role, new tax chores
When you own an unincorporated small business by yourself, the IRS considers you a sole proprietor. This means you have some extra tax-filing work to do.
Your business earnings (or losses) are included as part of your individual income tax filing. To determine just how much to report on your Form 1040 (and you must use the long form), you itemize your operational income and expenses on either Schedule C or Schedule C-EZ.
As the name indicates, the C-EZ is a streamlined version of the more-detailed Schedule C. So when can — and should — you use one form over the other?
Take heed of the title
Guidance comes from the form names. Schedule C is titled “Profit or Loss from Business.” The EZ is “Net Profit from Business.” If you report a business loss, you can’t use the short form.
The IRS also requires a Form C-EZ filer to operate only one business. If you run two or more sole proprietorships, you must file a Schedule C for each.
Schedule C-EZ also is acceptable if you:
- Have business expenses of $5,000 or less.
- Use the cash method of accounting.
- Do not have inventory at any time during the year.
- Never hire an employee.
- Do not depreciate any business property.
- Do not claim expenses for business use of your home.
- Do not carry over passive activity losses from an earlier tax year.
Don’t trade ease for savings
If you meet all of these requirements, then filing the simpler Schedule C-EZ probably will make your business tax life much easier.
But don’t opt for simplicity just to cut down on your tax-filing duties.
If your home office is indispensable to your firm’s operation, claim the deduction and use Schedule C. What it costs you in time to complete the longer form could more than repay you in tax savings. And it might not be that much more work now that the IRS has approved a simplified home office deduction method.
The IRS won’t penalize you for taking every legitimate business deduction you can. Don’t penalize yourself by using the wrong form.
Share