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Profit or Loss From BusinessIntroductionUse Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. 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, a not-for-profit activity, or a hobby does not qualify as a business. To report income from a nonbusiness activity, see the instructions for Schedule 1 (Form 1040), line 8j. Also, use Schedule C to report (a) wages and expenses you had as a statutory employee; (b) income and deductions of certain qualified joint ventures; and (c) certain amounts shown on a Form 1099, such as Form 1099-MISC, Form 1099-NEC, and Form 1099-K. See the instructions on your Form 1099 for more information about what to report on Schedule C. You may be subject to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more information. Future DevelopmentsFor the latest information about developments related to Schedule C and its instructions, such as legislation enacted after they were published, go to IRS.gov/ScheduleC. What's NewStandard mileage rate. The business standard mileage rate from January 1, 2022, to June 30, 2022, is 58.5 cents per mile. The business standard mileage rate from July 1, 2022, to December 31, 2022, is 62.5 cents per mile. New Form 7205, Energy Efficient Commercial Buildings Deduction. This new form and its separate instructions are used to claim the IRC 179D deduction for qualifying energy efficient commercial building expenses. See Form 7205. RemindersGig Economy Tax Center. The gig (or on-demand, sharing, or access) economy refers to an activity where people earn income providing on-demand work, services, or goods. Go to IRS.gov/Gig to get more information about the tax consequences of participating in the gig economy. Business meal expense. For a limited time, business meals are 100% deductible under certain conditions. See Line 24b, later, for more information. Excess business loss limitation. If you report a loss on line 31 of your Schedule C (Form 1040), you may be subject to a business loss limitation. The disallowed loss resulting from the limitation will not be reflected on line 31 of your Schedule C. Instead, use Form 461 to determine the amount of your excess business loss, which will be included as income on Schedule 1 (Form 1040), line 8p. Any disallowed loss resulting from this limitation will be treated as a net operating loss that must be carried forward and deducted in a subsequent year. See Form 461 and its instructions for details on the excess business loss limitation. Small Business and Self-Employed (SB/SE) Tax Center. Do you need help with a tax issue or preparing your return, or do you need a free publication or form? SB/SE serves taxpayers who file Form 1040, 1040-SR, Schedules C, E, F, or Form 2106, as well as small business taxpayers with assets under $10 million. For additional information, go to the Small Business and Self-Employed Tax Center at IRS.gov/SmallBiz. General InstructionsOther Schedules and Forms You May Have To File
Single-member limited liability company (LLC). Generally, a single-member domestic LLC is not treated as a separate entity for federal income tax purposes. If you are the sole member of a domestic LLC, file Schedule C (or Schedule E or F, if applicable) unless you have elected to treat the domestic LLC as a corporation. See Form 8832 for details on making this election and for information about the tax treatment of a foreign LLC. Single-member LLCs with employees. A single-member LLC must file employment tax returns using the LLC's name and employer identification number (EIN) rather than the owner's name and EIN, even if the LLC is not treated as a separate entity for federal income tax purposes. Heavy highway vehicle use tax. If you use certain highway trucks, truck-trailers, tractor-trailers, or buses in your trade or business, you may have to pay a federal highway motor vehicle use tax. See the Instructions for Form 2290 to find out if you must pay this tax and go to IRS.gov/Trucker for the most recent developments. Information returns. You may have to file information returns for wages paid to employees, and certain payments of fees and other nonemployee compensation, interest, rents, royalties, real estate transactions, annuities, and pensions. See Line I, later, and the 2022 General Instructions for Certain Information Returns for details and other payments that may require you to file a Form 1099. If you received cash of more than $10,000 in one or more related transactions in your trade or business, you may have to file Form 8300. For details, see Pub. 1544. Business Owned and Operated by SpousesGenerally, if you and your spouse jointly own and operate an unincorporated business and share in the profits and losses, you are partners in a partnership, whether or not you have a formal partnership agreement. You generally have to file Form 1065 instead of Schedule C for your joint business activity; however, you may not have to file Form 1065 if either of the following applies.
Otherwise, use Form 1065. See Pub. 541 for information about partnerships. Qualified Joint Venture
You and your spouse can elect to treat an unincorporated business as a qualified joint venture instead of a partnership if you:
Making the election will allow you to avoid the complexity of Form 1065, but still give each of you credit for social security earnings on which retirement benefits, disability benefits, survivor benefits, and insurance (Medicare) benefits are based. In most cases, this election will not increase the total tax owed on the joint return. Jointly owned property. You and your spouse must operate a business to make this election. Do not make the election for jointly owned property that is not a trade or business.
Making the election. To make this election, divide all items of income, gain, loss, deduction, and credit attributable to the business between you and your spouse based on your interests in the business. Each of you must file a separate Schedule C or F. Enter your share of the applicable income, deduction, or (loss) on the appropriate lines of your separate Schedule C or F. Each of you may also need to file a separate Schedule SE to pay self-employment tax. If the business was taxed as a partnership before you made the election, the partnership will be treated as terminating at the end of the preceding tax year. For information on how to report the termination of the partnership, see Pub. 541. Revoking the election. The election can be revoked only with the permission of the IRS. However, the election remains in effect only for as long as you and your spouse continue to meet the requirements to make the election. If you and your spouse fail to meet the requirements for any year, you will need to make a new election to be treated as a qualified joint venture in any future year. Employer identification number (EIN). You and your spouse do not need to obtain an EIN to make the election. But you may need an EIN to file other returns, such as employment or excise tax returns. To apply for an EIN, see the Instructions for Form SS-4 or go to IRS.gov/EIN. Rental real estate business. If you and your spouse make the election for your rental real estate business, you must each report your share of income and deductions on Schedule E. Rental real estate income is not generally included in net earnings from self-employment subject to self-employment tax and is generally subject to the passive loss limitation rules. Electing qualified joint venture status does not alter the application of the self-employment tax or the passive loss limitation rules. More information. For more information on qualified joint ventures, go to IRS.gov/QJV. Community IncomeIf you and your spouse wholly own an unincorporated business as community property under the community property laws of a state, foreign country, or U.S. possession, you can treat your wholly owned, unincorporated business as a sole proprietorship, instead of a partnership. Any change in your reporting position will be treated as a conversion of the entity. Report your income and deductions as follows.
Reportable Transaction Disclosure StatementUse Form 8886 to disclose information for each reportable transaction in which you participated. Form 8886 must be filed for each tax year that your federal income tax liability is affected by your participation in the transaction. You may have to pay a penalty if you are required to file Form 8886 but do not do so. You may also have to pay interest and penalties on any reportable transaction understatements. The following are reportable transactions.
See the Instructions for Form 8886 for more details. Capital Construction FundDo not claim on Schedule C the deduction for amounts contributed to a capital construction fund set up under chapter 535 of title 46 of the United States Code. Instead, reduce the amount you would otherwise enter on Form 1040 or 1040-SR, line 15, by the amount of the deduction. Next to line 15, enter “CCF” and the amount of the deduction. For details, see Pub. 595. Additional InformationSee Pub. 334 for more information for small businesses. Specific InstructionsFilers of Form 1041. Do not complete the block labeled “Social security number (SSN).” Instead, enter the EIN issued to the estate or trust on line C. Line ADescribe the business or professional activity that provided your principal source of income reported on line 1. If you owned more than one business, you must complete a separate Schedule C for each business. Give the general field or activity and the type of product or service. If your general field or activity is wholesale or retail trade, or services connected with production services (mining, construction, or manufacturing), also give the type of customer or client; for example, “wholesale sale of hardware to retailers” or “appraisal of real estate for lending institutions.” For nonstore retailers, select the PBA code by the primary product that your establishment sells. For example, establishments primarily selling prescription and non-prescription drugs, select PBA code 456110 Pharmacies & drug retailers. Line BEnter on line B the six-digit code from the Principal Business or Professional Activity Codes chart at the end of these instructions. For nonstore retailers, select the PBA code by the primary product that your establishment sells. For example, establishments primarily selling prescription and non-prescription drugs, select PBA code 456110 Pharmacies & drug retailers. Line DEnter on line D the EIN that was issued to you on Form SS-4. Do not enter your SSN on this line. Do not enter another taxpayer's EIN (for example, from any Forms 1099-MISC that you received). If you do not have an EIN, leave line D blank. You need an EIN only if you have a qualified retirement plan or are required to file employment, excise, alcohol, tobacco, or firearms returns, or are a payer of gambling winnings. If you need an EIN, see the Instructions for Form SS-4. Single-member LLCs. If you are the sole owner of an LLC that is not treated as a separate entity for federal income tax purposes, enter on line D the EIN that was issued to the LLC (in the LLC's legal name) for a qualified retirement plan, to file employment, excise, alcohol, tobacco, or firearms returns, or as a payer of gambling winnings. If you do not have such an EIN, leave line D blank. Line EEnter your business address. Show a street address instead of a box number. Include the suite or room number, if any. If you conducted the business from your home located at the address shown on page 1 of your tax return, you do not have to complete this line. Line FGenerally, you can use the cash method, an accrual method, or any other method permitted by the Internal Revenue Code. In all cases, the method used must clearly reflect income. Unless you are a small business taxpayer (defined later under Part III), you must use an accrual method for sales and purchases of inventory items. Special rules apply to long-term contracts (see section 460 for details). If you use the cash method, show all items of taxable income actually or constructively received during the year (in cash, property, or services). Income is constructively received when it is credited to your account or set aside for you to use. Also, show amounts actually paid during the year for deductible expenses. However, if the payment of an expenditure creates an asset having a useful life that extends beyond 12 months or the end of the next tax year, it may not be deductible or may be deductible only in part for the year of the payment. See chapter 1 of Pub. 535. For amounts includible in income and deductible as expense under an accrual method, see Pub. 538. To change your accounting method, you must generally file Form 3115. You may also have to make an adjustment to prevent amounts of income or expense from being duplicated or omitted. This is called a section 481(a) adjustment. Example. You change to the cash method of accounting and choose to account for inventoriable items in the same manner as non-incidental materials and supplies for the 2022 tax year. You accrued sales in 2021 for which you received payment in 2022. You must report those sales in both years as a result of changing your accounting method and must make a section 481(a) adjustment to prevent duplication of income. A net negative section 481 adjustment is generally taken into account in the year of change. A net positive section 481(a) adjustment is generally taken into account over a period of 4 years. Include any net positive section 481(a) adjustments on line 6. If the net section 481(a) adjustment is negative, report it in Part V. More information. For more information about changing your accounting method and the section 481(a) adjustment, see the Instructions for Form 3115. Additional information is also available in various revenue procedures. See Rev. Proc. 2019-43 (and any subsequent revenue procedures modifying Rev. Proc. 2019-43) for a list of automatic changes, including a description of its effect on prior lists of automatic changes.Rev. Proc. 2019-43 is available at IRS.gov/irb/2019-48_IRB#RP-2019-43. Line GIf your business activity was not a rental activity and you met any of the material participation tests, explained next, or the exception for oil and gas applies, check the “Yes” box. Otherwise, check the “No” box. If you check the “No” box, this activity is passive. If you have a loss from a passive activity, see Limit on losses, later. If you have a profit from the rental of property to a nonpassive activity, see Recharacterization of Passive Income in Pub. 925 to find out how to report the net income. Material participation. For purposes of the seven material participation tests listed later, participation generally includes any work you did in connection with an activity if you owned an interest in the activity at the time you did the work. The capacity in which you did the work does not matter. However, work is not treated as participation if it is work that an owner would not customarily do in the same type of activity and one of your main reasons for doing the work was to avoid the disallowance of losses or credits from the activity under the passive activity rules. Work you did as an investor in an activity is not treated as participation unless you were directly involved in the day-to-day management or operations of the activity. Work done as an investor includes:
Participation by your spouse during the tax year in an activity you own can be counted as your participation in the activity. This rule applies even if your spouse did not own an interest in the activity and whether or not you and your spouse file a joint return. However, this rule does not apply for purposes of determining whether you and your spouse can elect to have your business treated as a qualified joint venture instead of a partnership (see Qualified Joint Venture, earlier). For purposes of the passive activity rules, you materially participated in the operation of this trade or business activity during 2022 if you met any of the following seven tests.
Rental of personal property. Generally, a rental activity (such as long-term equipment leasing) is a passive activity even if you materially participated in the activity. However, if you met any of the five exceptions listed under Rental Activities in the Instructions for Form 8582, the rental of the property is not treated as a rental activity and the material participation rules explained earlier apply. Exception for oil and gas. If you are filing Schedule C to report income and deductions from an oil or gas well in which you own a working interest directly or through an entity that does not limit your liability, check the “Yes” box. The activity of owning a working interest is not a passive activity, regardless of your participation. Limit on losses. Your business activity loss may be limited if you checked the “No” box on line G. In addition, your rental activity loss may be limited even if you materially participated. In general, a business activity in which you do not materially participate or a rental activity is a passive activity and you have to use Form 8582 to apply a limitation that may reduce the loss, if any, that you may enter on Schedule C, line 31. For details, see Pub. 925. Line HIf you started or acquired this business in 2022, check the box on line H. Also, check the box if you are reopening or restarting this business after temporarily closing it, and you did not file a 2021 Schedule C for this business. Line IIf you made any payment in 2022 that would require you to file any Forms 1099, check the “Yes” box. Otherwise, check the “No” box. You may have to file information returns for wages paid to employees, certain payments of fees and other nonemployee compensation, interest, rents, royalties, real estate transactions, annuities, and pensions. You may also have to file an information return if you sold $5,000 or more of consumer products to a person on a buy-sell, a deposit-commission, or other similar basis for resale.
Part I. IncomeExcept as otherwise provided in the Internal Revenue Code, gross income includes income from whatever source derived. In certain circumstances, however, gross income does not include extraterritorial income that is qualifying foreign trade income. Use Form 8873 to figure the extraterritorial income exclusion. Report it on Schedule C as explained in the Instructions for Form 8873. If you were a debtor in a chapter 11 bankruptcy case during 2022, see Chapter 11 Bankruptcy Cases in the Instructions for Form 1040 (under Income) and the Instructions for Schedule SE. Be sure to report all income attributable to your trade or business from all sources. You may receive one or more Forms 1099 from people who are required to provide information to the IRS listing amounts that may be income you received as a result of your trade or business activities. The following is a list of some of the common Forms 1099.
Line 1Enter gross receipts from your trade or business. Be sure to check any Forms 1099 you received for business income that must be reported on this line. If you received one or more Forms 1099-NEC, be sure line 1 includes amounts properly shown on your Forms 1099-NEC. If the total amounts that were reported in box 1 of Forms 1099-NEC are more than the total you are reporting on line 1, attach a statement explaining the difference. Statutory employees. If you received a Form W-2, Wage and Tax Statement, and the "Statutory employee" box in box 13 of that form was checked, report your income and expenses related to that income on Schedule C. Enter your statutory employee income from box 1 of Form W-2 on line 1 of Schedule C and check the box on that line. Social security and Medicare tax should have been withheld from your earnings; as a result, you do not owe self-employment tax on these earnings. Statutory employees include full-time life insurance agents, certain agent or commission drivers and traveling salespersons, and certain homeworkers. If you had both self-employment income and statutory employee income, you must file two Schedules C. You cannot combine these amounts on a single Schedule C.
Installment sales. Generally, the installment method cannot be used to report income from the sale of (a) personal property regularly sold under the installment method, or (b) real property held for resale to customers. But the installment method can be used to report income from sales of certain residential lots and timeshares if you elect to pay interest on the tax due on that income after the year of sale. See section 453(l)(2)(B) for details. If you make this election, include the interest in the total on Schedule 2 (Form 1040), line 14, and enter the amount of interest and “453(l)(3)” on the line next to that box. If you use the installment method, attach a statement to your return. Show separately for 2022 and the 3 preceding years: gross sales, cost of goods sold, gross profit, percentage of gross profit to gross sales, amounts collected, and gross profit on amounts collected. Line 2Report your sales returns and allowances as a positive number on line 2. A sales return is a cash or credit refund you gave to customers who returned defective, damaged, or unwanted products. A sales allowance is a reduction in the selling price of products, instead of a cash or credit refund. Line 6Report on line 6 business income not reported elsewhere in Part I. Be sure to include amounts from the following.
If the business use percentage of any listed property (defined underLine 13, later) dropped to 50% or less in 2022, report on this line any recapture of excess depreciation, including any section 179 expense deduction. Use Part IV of Form 4797 to figure the recapture. Also, if the business use percentage drops to 50% or less on leased listed property (other than a vehicle), include on this line any inclusion amount. See chapter 5 of Pub. 946 to figure the amount. Part II. ExpensesCapitalizing costs of producing property and acquiring property for resale. If you produced real or tangible personal property or acquired real or personal property for resale, you must generally capitalize certain expenses in inventory or other property. These expenses include the direct costs of the property and any indirect costs properly allocable to that property. Reduce the amounts on lines 8 through 26 and Part V by amounts capitalized. See Pub. 538 for a discussion of the uniform capitalization rules. Exception for a small business taxpayer.A small business taxpayer (defined later under Part III) is not required to capitalize certain expenses to inventory or other property. See Pub. 538 for more details. Exception for creative property.If you are a freelance artist, author, or photographer, you may be exempt from the capitalization rules. However, your personal efforts must have created (or reasonably be expected to create) the property. This exception does not apply to any expense related to printing, photographic plates, motion picture films, videotapes, or similar items. These expenses are subject to the capitalization rules. For details, see Uniform Capitalization Rules in Pub. 538. Line 9You can deduct the actual expenses of operating your car or truck or take the standard mileage rate. This is true even if you used your vehicle for hire (such as a taxicab). You must use actual expenses if you used five or more vehicles simultaneously in your business (such as in fleet operations). You cannot use actual expenses for a leased vehicle if you previously used the standard mileage rate for that vehicle. You can take the standard mileage rate for 2022 only if you:
If you take the standard mileage rate:
If you deduct actual expenses:
For details, see chapter 4 of Pub. 463. Information on your vehicle. If you claim any car and truck expenses, you must provide certain information on the use of your vehicle by completing one of the following.
Line 10Enter the total commissions and fees for the tax year. Do not include commissions or fees that are capitalized or deducted elsewhere on your return. You must file Form 1099-NEC to report certain commissions and fees of $600 or more during the year. See the Instructions for Forms 1099-MISC and 1099-NEC for details. Sales of property. Generally, commissions and other fees paid to facilitate the sale of property must be capitalized. However, if you are a dealer in property, enter on line 10 the commissions and fees you paid to facilitate the sale of that property. Note. A dealer in property is a person who regularly sells property in the ordinary course of their trade or business. For more information on the capitalization of commissions and fees, see the examples under Regulations section 1.263(a)-1(e). Line 11Enter the total cost of contract labor for the tax year. Contract labor includes payments to persons you do not treat as employees (for example, independent contractors) for services performed for your trade or business. Do not include contract labor deducted elsewhere on your return, such as contract labor includible on line 17, 21, 26, or 37. Also, do not include salaries and wages paid to your employees; instead, see Line 26, later. You must file Form 1099-NEC to report contract labor payments of $600 or more during the year. See the Instructions for Forms 1099-MISC and 1099-NEC for details. Line 12Enter your deduction for depletion on this line. If you have timber depletion, attach Form T (Timber). See chapter 9 of Pub. 535 for details. Line 13Depreciation and section 179 expense deduction. Depreciation is the annual deduction allowed to recover the cost or other basis of business or investment property having a useful life substantially beyond the tax year. You can also depreciate improvements made to leased business property. However, stock in trade, inventories, and land are not depreciable. Depreciation starts when you first use the property in your business or for the production of income. It ends when you take the property out of service, deduct all your depreciable cost or other basis, or no longer use the property in your business or for the production of income. You can also elect under section 179 to expense part or all of the cost of certain property you bought in 2022 for use in your business. See the Instructions for Form 4562 and Pub. 946 to figure the amount to enter on line 13. When to attach Form 4562. You must complete and attach Form 4562 only if you are claiming:
If you acquired depreciable property for the first time in 2022, see Pub. 946. Listed property. Listed property generally includes but is not limited to:
Exception.Listed property does not include photographic, phonographic, communication, or video equipment used exclusively in your trade or business or at your regular business establishment. For purposes of this exception, a portion of your home is treated as a regular business establishment only if that portion meets the requirements under section 280A(c)(1) for deducting expenses for the business use of your home. Recapture.See Line 6, earlier, if the business use percentage of any listed property dropped to 50% or less in 2022. Line 14Deduct contributions to employee benefit programs that are not an incidental part of a pension or profit-sharing plan included on line 19. Examples are accident and health plans, group-term life insurance, and dependent care assistance programs. If you made contributions on your behalf as a self-employed person to a dependent care assistance program, complete Form 2441, Parts I and III, to figure your deductible contributions to that program. You cannot deduct contributions you made on your behalf as a self-employed person for group-term life insurance. Do not include on line 14 any contributions you made on your behalf as a self-employed person to an accident and health plan. However, you may be able to deduct on Schedule 1 (Form 1040), line 17, the amount you paid for health insurance on behalf of yourself, your spouse, and dependents, even if you do not itemize your deductions. See the instructions for Schedule 1 (Form 1040), line 17, for details. You must reduce your line 14 deduction by the amount of any credit for small employer health insurance premiums determined on Form 8941. See Form 8941 and its instructions to determine which expenses are eligible for the credit. Line 15Deduct premiums paid for business insurance on line 15. Deduct on line 14 amounts paid for employee accident and health insurance. Do not deduct amounts credited to a reserve for self-insurance or premiums paid for a policy that pays for your lost earnings due to sickness or disability. For details, see chapter 6 of Pub. 535. Lines 16a and 16bInterest allocation rules. The tax treatment of interest expense differs depending on its type. For example, home mortgage interest and investment interest are treated differently. “Interest allocation” rules require you to allocate (classify) your interest expense so it is deducted (or capitalized) on the correct line of your return and receives the right tax treatment. These rules could affect how much interest you are allowed to deduct on Schedule C. Generally, you allocate interest expense by tracing how the proceeds of the loan were used. See chapter 4 of Pub. 535 for details. Limitation on business interest. You must file Form 8990 to deduct any interest expenses of this trade or business unless you are a small business taxpayer (defined under Part III) or meet one of the other filing exceptions listed in the Instructions for Form 8990. If you must file Form 8990, figure the limit on your business interest expenses on Form 8990 before completing lines 16a and 16b. Follow the instructions under How to report, later, but report the reduced interest on lines 16a and 16b. The interest you can't deduct this year will carry forward to next year on Form 8990. If you are a small business taxpayer or meet one of the other filing exceptions for Form 8990, follow the instructions under How to report, later, and report all of your deductible interest on lines 16a and 16b. How to report. If you have a mortgage on real property used in your business, enter on line 16a the interest you paid for 2022 to banks or other financial institutions for which you received a Form 1098 (or similar statement). If you did not receive a Form 1098, enter the interest on line 16b. If you paid more mortgage interest than is shown on Form 1098, see chapter 4 of Pub. 535 to find out if you can deduct the additional interest. If you can, include the amount on line 16a. Attach a statement to your return explaining the difference and enter “See attached” in the margin next to line 16a. If you and at least one other person (other than your spouse if you file a joint return) were liable for and paid interest on the mortgage and the other person received the Form 1098, include your share of the interest on line 16b. Attach a statement to your return showing the name and address of the person who received the Form 1098. In the margin next to line 16b, enter “See attached.” If you paid interest in 2022 that also applies to future years, deduct only the part that applies to 2022. Line 17Include on this line fees charged by accountants and attorneys that are ordinary and necessary expenses directly related to operating your business. Include fees for tax advice related to your business and for preparation of the tax forms related to your business. Also, include expenses incurred in resolving asserted tax deficiencies related to your business. For more information, see Pub. 334 or 535. Line 18Include on this line your expenses for Line 19Enter your deduction for the contributions you made for the benefit of your employees to a pension, profit-sharing, or annuity plan (including SEP, SIMPLE, and SARSEP plans described in Pub. 560). If the plan included you as a self-employed person, enter the contributions made as an employer on your behalf on Schedule 1 (Form 1040), line 16, not on Schedule C. This deduction may be subject to limitations. For more information on potential limitations, see Pub. 560. In most cases, you must file the applicable form listed below if you maintain a pension, profit-sharing, or other funded-deferred compensation plan. The filing requirement is not affected by whether or not the plan qualified under the Internal Revenue Code, or whether or not you claim a deduction for the current tax year. There is a penalty for failure to timely file these forms. Form 5500-EZ. File this form if you have a one-participant retirement plan that meets certain requirements. A one-participant plan is a plan that covers only you (or you and your spouse). Form 5500-SF. File this form electronically with the Department of Labor (at efast.dol.gov) if you have a small plan (fewer than 100 participants in most cases) that meets certain requirements. Form 5500. File this form electronically with the Department of Labor (at efast.dol.gov) for a plan that does not meet the requirements for filing Form 5500-EZ or Form 5500-SF. For details, see Pub. 560. Lines 20a and 20bIf you rented or leased vehicles, machinery, or equipment, enter on line 20a the business portion of your rental cost. But if you leased a vehicle for a term of 30 days or more, you may have to reduce your deduction by an amount called the inclusion amount. See Leasing a Car in chapter 4 of Pub. 463 to figure this amount. Enter on line 20b amounts paid to rent or lease other property, such as office space in a building. Line 21Deduct the cost of incidental repairs and maintenance that do not add to the property's value or appreciably prolong its life. Do not deduct the value of your own labor. Do not deduct amounts spent to restore or replace property; they must be capitalized. Line 22In most cases, you can deduct the cost of materials and supplies only to the extent you actually consumed and used them in your business during the tax year (unless you deducted them in a prior tax year). However, if you had incidental materials and supplies on hand for which you kept no inventories or records of use, you can deduct the cost of those you actually purchased during the tax year, provided that method clearly reflects income. You can also deduct the cost of books, professional instruments, equipment, etc., if you normally use them within a year. However, if their usefulness extends substantially beyond a year, you must generally recover their costs through depreciation. Line 23You can deduct the following taxes and licenses on this line.
Do not deduct the following.
Line 24aEnter your expenses for lodging and transportation connected with overnight travel for business while away from your tax home. In most cases, your tax home is your main place of business, regardless of where you maintain your family home. You cannot deduct expenses paid or incurred in connection with employment away from home if that period of employment exceeds 1 year. Also, you cannot deduct travel expenses for your spouse, your dependent, or any other individual unless that person is your employee, the travel is for a bona fide business purpose, and the expenses would otherwise be deductible by that person. Do not include expenses for meals on this line. Instead, see Line 24b, later. Do not include entertainment expenses on this line. Instead of keeping records of your actual incidental expenses, you can use an optional method for deducting incidental expenses only if you did not pay or incur meal expenses on a day you were traveling away from your tax home. The amount of the deduction is $5 a day. Incidental expenses include fees and tips given to porters, baggage carriers, bellhops, hotel maids, stewards or stewardesses and others on ships, and hotel servants in foreign countries. They do not include expenses for laundry, cleaning and pressing of clothing, lodging taxes, or the costs of telegrams or telephone calls. You cannot use this method on any day that you use the standard meal allowance (as explained underLine 24b, later). You cannot deduct expenses for attending a convention, seminar, or similar meeting held outside the North American area unless the meeting is directly related to your trade or business and it is as reasonable for the meeting to be held outside the North American area as within it. These rules apply to both employers and employees. Other rules apply to luxury water travel. For details on travel expenses, see chapter 1 of Pub. 463. Line 24bEnter your deductible business meal expenses. This includes expenses for meals while traveling away from home for business. Your deductible business meal expenses are a percentage of your actual business meal expenses or standard meal allowance. See Amount of deduction, later, for the percentage that applies to your actual meal expenses or standard meal allowance. In most cases, the percentage is 50%. However, business meals are 100% deductible if the meals are food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023. Do not include entertainment expenses on this line. Business meal expenses. You can deduct all or a percentage of the actual cost of a meal if the following conditions are met.
See Notice 2021-25 for examples and more information. Notice 2021-25 is available at IRS.gov/irb/2021-17_IRB#NOT-2021-17. Standard meal allowance. Instead of deducting the actual cost of your meals while traveling away from home, you can use the standard meal allowance for your daily meals and incidental expenses. Under this method, you deduct a specified amount, depending on where you travel, instead of keeping records of your actual meal expenses. However, you must still keep records to prove the time, place, and business purpose of your travel. The standard meal allowance is the federal meals and incidental expenses (M&IE) rate. You can find these rates for locations inside and outside the continental United States by going to the General Services Administration's website at GSA.gov/travel/plan-book/per-diem-rates/mie-breakdown. See chapter 2 of Pub. 463 for details on how to figure your deduction using the standard meal allowance, including special rules for partial days of travel. For special per diem rates and rules of high cost locales, see IRS.gov/irb/2021-52_IRB#NOT-2021-52. Amount of deduction. Business meals are 100% deductible if the meals are food or beverages provided by a restaurant and paid or incurred after December 31, 2020, and before January 1, 2023. In most cases, for other business meals, you can deduct only 50% of your business meal expenses, including meals incurred while away from home on business. However, for individuals subject to the Department of Transportation (DOT) hours of service limits, the percentage for other business meals is increased from 50% to 80% for business meals consumed during, or incident to, any period of duty for which those limits are in effect. Individuals subject to the DOT hours of service limits include the following.
However, you can fully deduct meals and incidentals furnished or reimbursed to an employee if you properly treat the expense as wages subject to withholding. You can also fully deduct meals and incidentals provided to a nonemployee to the extent the expenses are includible in the gross income of that person and reported on Form 1099-NEC. See Pub. 535 for details and other exceptions. Daycare providers. If you qualify as a family daycare provider, you can use the standard meal and snack rates, instead of actual costs, to figure the deductible cost of meals and snacks provided to eligible children. See Pub. 587 for details, including recordkeeping requirements. Line 25Deduct utility expenses only for your trade or business. Local telephone service. If you used your home phone for business, do not deduct the base rate (including taxes) of the first phone line into your residence. But you can deduct any additional costs you incurred for business that are more than the base rate of the first phone line. For example, if you had a second line, you can deduct the business percentage of the charges for that line, including the base rate charges. Line 26Enter the total salaries and wages for the tax year reduced by the amount of the following credit(s), if applicable.
Do not reduce your deduction for any portion of a credit that was passed through to you from a pass-through entity. See the instructions for the credit form for more information. Do not include salaries and wages deducted elsewhere on your return or amounts paid to yourself.
In most cases, you are required to file Form W-2 for each employee. See the General Instructions for Forms W-2 and W-3. Line 30Business use of your home. You may be able to deduct certain expenses for business use of your home, subject to limitations. To claim a deduction for business use of your home, you can use Form 8829 or you can elect to determine the amount of the deduction using a simplified method. If you have a business use of another home, you can’t use the simplified method for that home. You can use the Form 8829 to claim expenses for business use of the other home. For additional information about claiming this deduction, see Pub. 587.
Simplified method. The simplified method is an alternative to the calculation, allocation, and substantiation of actual expenses. In most cases, you will figure your deduction by multiplying the area (measured in square feet) used regularly and exclusively for business, regularly for daycare, or regularly for storage of inventory or product samples, by $5. The area you use to figure your deduction cannot exceed 300 square feet. You cannot use the simplified method to figure a deduction for rental use of your home. Electing to use the simplified method.You choose whether or not to use the simplified method each tax year. Make the election by using the simplified method to figure the deduction for the qualified business use of a home on a timely filed, original federal income tax return for that year. An election for a year, once made, is irrevocable. A change from using the simplified method in one year to actual expenses in a succeeding year, or vice versa, is not a change in method of accounting and does not require the consent of the Commissioner. If you share your home with someone else who uses the home for a separate business that qualifies for this deduction, each of you may make your own election, but not for the same portion of the home. If you conduct more than one business that qualifies for this deduction in your home, your election to use the simplified method applies to all your qualified business uses of your home. You are limited to a maximum of 300 square feet for all of the businesses you conduct in your home that qualify for this deduction. Allocate the actual square footage used (up to the maximum 300 square feet) among your qualified business uses in any reasonable manner you choose, but you may not allocate more square feet to a qualified business use than you actually use in that business. Simplified Method Worksheet
Daycare Facility Worksheet (for simplified method)
Business use of more than one home.You may have used more than one home in your business. If you used more than one home for the same business during 2022, you may elect to use the simplified method for only one home; you must file a Form 8829 to claim a business use of the home deduction for any additional home. If one or more of the homes were not used for the entire year (for example, you moved during the year), see Part-year use or area changes (for simplified method only), later, and Columns (a) and (b) in the Instructions for Form 8829. Other requirements must still be met.You must still meet all the use requirements to claim a deduction for business use of the home. The simplified method is only an alternative to the calculation, allocation, and substantiation of actual expenses. The simplified method is not an alternative to the exclusivity and other tests that must be met in order to qualify for this deduction. For more information about qualifying business uses, see Qualifying for a Deduction in Pub. 587. Gross income limitation.The amount of your deduction is still limited to the gross income derived from qualified business use of the home reduced by the business deductions that are not related to your use of the home. If this limitation reduces the amount of your deduction, you cannot carry over the difference to another tax year. Carryover of actual expenses from Form 8829.If you used Form 8829 in a prior year, and you had actual expenses that you could carry over to the next year, you cannot claim those expenses if you are using the simplified method. Instead, the actual expenses from Form 8829 that were not allowed will be carried over to the next year that you use actual expenses to figure your deduction. Depreciation of home.You cannot deduct any depreciation (including any additional first-year depreciation) or section 179 expense for the portion of your home that is used in a qualified business use if you figure the deduction for the business use of your home using the simplified method. The depreciation deduction allowable for that portion of the home for that year is deemed to be zero.
Figuring your allowable expenses for business use of the home. You will figure the deduction using Form 8829 or the Simplified Method Worksheet, or both.
Using Form 8829.Use Form 8829 to figure and claim this deduction for a home if you are not or cannot use the simplified method for that home. For information about claiming this deduction using Form 8829, see the Instructions for Form 8829 and Pub. 587. Using the simplified method.Use the Simplified Method Worksheet in these instructions to figure your deduction for a qualified business use of your home if you are electing to use the simplified method for that home. Shared use (for simplified method only).If you share your home with someone else who uses the home for a separate business that also qualifies for this deduction, you may not include the same square feet to figure your deduction as the other person. You must allocate the shared space between you and the other person in a reasonable manner. Example.Kristen and Lindsey are roommates. Kristen uses 300 square feet of their home for a qualified business use. Lindsey uses 200 square feet of their home for a separate qualified business use. The qualified business uses share 100 square feet. In addition to the portion that they do not share, Kristen and Lindsey can both claim 50 of the 100 square feet or divide the 100 square feet between them in any reasonable manner. If divided evenly, Kristen could claim 250 square feet using the simplified method and Lindsey could claim 150 square feet. Part-year use or area changes (for simplified method only).If your qualified business use was for a portion of the tax year (for example, a seasonal business, a business that begins during the year, or you moved during the year) or you changed the square footage of your qualified business use, your deduction is limited to the average monthly allowable square footage. You figure the average monthly allowable square footage by adding the amount of allowable square feet you used in each month and dividing the sum by 12. When determining the average monthly allowable square footage, you cannot take more than 300 square feet into account for any one month. Additionally, if your qualified business use was less than 15 days in a month, you must use -0- for that month. Example 1.Andy files his federal income tax return on a calendar year basis. On July 20, he began using 400 square feet of his home for a qualified business use. He continued to use the 400 square feet until the end of the year. Andy's average monthly allowable square footage is 125 square feet (300 square feet for August through December divided by the number of months in the year ((0 + 0 + 0 + 0 + 0 + 0 + 0 + 300 + 300 + 300 + 300 + 300)/12)). Example 2.Roland files his federal income tax return on a calendar year basis. On April 20, he began using 100 square feet of his home for a qualified business use. On August 5, he expanded the area of his qualified business use to 350 square feet. Roland continued to use the 350 square feet until the end of the year. Roland's average monthly allowable square footage is 150 square feet (100 square feet for May through July and 300 square feet for August through December divided by the number of months in the year ((0 + 0 + 0 + 0 + 100 + 100 +100 + 300 + 300 + 300 + 300 + 300)/12)). Example 3.Donna files her federal income tax return on a calendar year basis. From January 1 through July 16, she used 300 square feet of her home for a qualified business use. On July 17, Donna moved to a new home and immediately began using 200 square feet of the new home for the same qualified business use. While preparing her tax return, Donna used the simplified method to deduct expenses for the qualified business use of her old home. Donna's average monthly allowable square footage is 175 square feet (300 square feet for January through July divided by the number of months in the year ((300 + 300 + 300 + 300 + 300 + 300 + 300 + 0 + 0 + 0 + 0 + 0)/12)). Donna also prepared Form 8829 to deduct the actual expenses associated with the qualified business use of her new home. Once you have determined your allowable square footage, enter the result on line 2 of the Simplified Method Worksheet.
Reporting your expenses for business use of the home. If you did not use the simplified method, include the amount from line 36 of Form 8829 on line 30 of the Schedule C you are filing for that business. If you used the simplified method.If you elect to use the simplified method for the business use of a home, complete the additional entry spaces on line 30 for that home only. Include the amount from line 5 of the Simplified Method Worksheet on line 30. If you itemize your deductions on Schedule A, you may deduct your mortgage interest, real estate taxes, and casualty losses on Schedule A as if you did not use your home for business. You cannot deduct any excess mortgage interest, excess real estate taxes, or excess casualty losses on Schedule C for this home. Use Part II of Schedule C to deduct business expenses that are unrelated to the qualified business use of the home (for example, expenses for advertising, wages, or supplies, or depreciation of equipment or furniture). Deduction figured on multiple forms.If you used more than one home for a business during the year, you may use a Form 8829 for each home or you may use the simplified method for one home and Form 8829 for any other home. Combine the amount you figured using the simplified method and the amounts you figured on your Forms 8829, and then enter the total on line 30 of the Schedule C you are filing for that business. Line 31Figuring your net profit or loss. If your expenses (including the expenses you report on line 30) are more than your gross income, do not enter your loss on line 31 until you have applied the at-risk rules and the passive activity loss rules. To apply these rules, follow the instructions under Line 32, later, and the Instructions for Form 8582. After applying those rules, the amount on line 31 will be your loss, and it may be smaller than the amount you figured by subtracting line 30 from line 29. If your gross income is more than your expenses (including the expenses you report on line 30), and you do not have prior year unallowed passive activity losses, subtract line 30 from line 29. The result is your net profit. If your gross income is more than your expenses (including the expenses you report on line 30), and you have prior year unallowed passive activity losses, do not enter your net profit on line 31 until you have figured the amount of prior year unallowed passive activity losses you may claim this year for this activity. Use Form 8582 to figure the amount of prior year unallowed passive activity losses you may include on line 31. Be sure to indicate that you are including prior year passive activity losses by entering "PAL" to the left of the entry space. If you checked the "No" box on line G, see the Instructions for Form 8582; you may need to include information from this schedule on that form, even if you have a net profit. Rental real estate activity.Unless you are a qualifying real estate professional, a rental real estate activity is a passive activity, even if you materially participated in the activity. If you have a loss, you may need to file Form 8582 to apply a limitation that may reduce your loss. See the Instructions for Form 8582. Reporting your net profit or loss. Once you have figured your net profit or loss, report it as follows.
Individuals.Enter your net profit or loss on line 31 and include it on Schedule 1 (Form 1040), line 3. Also, include your net profit or loss on Schedule SE, line 2. However, if you are a statutory employee or notary public, see Statutory employees or Notary public, later. Nonresident aliens.Enter your net profit or loss on line 31 and include it on Schedule 1 (Form 1040), line 3. You should also include this amount on Schedule SE, line 2, if you are covered under the U.S. social security system due to an international social security agreement currently in effect. See the Instructions for Schedule SE for information on international social security agreements. However, if you are a statutory employee or notary public, see Statutory employees or Notary public, later. Trusts and estates.Enter the net profit or loss on line 31 and include it on Form 1041, line 3. Statutory employees.Enter your net profit or loss on line 31 and include it on Schedule 1 (Form 1040), line 3. However, do not report this amount on Schedule SE, line 2. If you were a statutory employee and you are required to file Schedule SE because of other self-employment income, see the Instructions for Schedule SE. Notary public.Do not enter your net profit from line 31 on Schedule SE, line 2, unless you are required to file Schedule SE because you have other self-employment income. See the Instructions for Schedule SE.
Community income. If you and your spouse had community income and are filing separate returns, see the Instructions for Schedule SE before figuring self-employment tax. EIC. If you have a net profit on line 31, this amount is earned income and may qualify you for the EIC.
Line 32
At-risk rules. In most cases, if you have a business loss and amounts invested in the business for which you are not at risk, you must complete Form 6198 to apply a limitation that may reduce your loss. The at-risk rules generally limit the amount of loss (including loss on the disposition of assets) you can claim to the amount you could actually lose in the business. Check box 32b if you have amounts invested in this business for which you are not at risk, such as the following.
Figuring your loss. Before determining your loss, you must check box 32a or 32b to indicate whether the loss from your business activity is limited by the at-risk rules. Follow the instructions, next, that apply to your box 32 activity. All investment is at risk.If all amounts are at risk in this business, check box 32a. If you answered “Yes” on line G, your loss will not be reduced by the at-risk rules or the passive activity loss rules. See Line 31, earlier, for how to report your loss. But if you answered “No” on line G, you may need to complete Form 8582 to figure your loss to enter on line 31. See the Instructions for Form 8582 for details. Some investment is not at risk.If some investment is not at risk, check box 32b; the at-risk rules apply to your loss. Be sure to attach Form 6198 to your return. If you answered "Yes" on line G, complete Form 6198 to figure the loss to enter on line 31. The passive activity loss rules do not apply. See Line 31, earlier, for how to report your loss. But if you answered "No" on line G, the passive activity loss rules may apply. First, complete Form 6198 to figure the amount of your profit or (loss) for the at-risk activity, which may include amounts reported on other forms and schedules, and the at-risk amount for the activity. Follow the Instructions for Form 6198 to determine how much of your Schedule C loss will be allowed. After you figure the amount of your loss that is allowed under the at-risk rules, you may need to complete Form 8582 to figure the loss to enter on line 31. See the Instructions for Form 8582 for details.
At-risk loss deduction. Any loss from this business not allowed for 2022 only because of the at-risk rules is treated as a deduction allocable to the business in 2023. More information. For details, see the Instructions for Form 6198 and Pub. 925. Part III. Cost of Goods SoldIn most cases, if you engaged in a trade or business in which the production, purchase, or sale of merchandise was an income-producing factor, you must take inventories into account at the beginning and end of your tax year. Exception for small business taxpayers. If you are a small business taxpayer, you can choose not to keep an inventory, but you must still use a method of accounting for inventory that clearly reflects income. If you choose not to keep an inventory, you won't be treated as failing to clearly reflect income if your method of accounting for inventory treats inventory as non-incidental material or supplies, or conforms to your financial accounting treatment of inventories. If, however, you choose to keep an inventory, you must generally value the inventory each year to determine your cost of goods sold in Part III of Schedule C. Small business taxpayer.You qualify as a small business taxpayer if you (a) have average annual gross receipts of $27 million or less for the 3 prior tax years, and (b) are not a tax shelter (as defined in section 448(d)(3)). If your business has not been in existence for all of the 3-tax-year period used in figuring average gross receipts, base your average on the period it has existed, and if your business has a predecessor entity, include the gross receipts of the predecessor entity from the 3-tax-year period when figuring average gross receipts. If your business (or predecessor entity) had short tax years for any of the 3-tax-year period, annualize your business' gross receipts for the short tax years that are part of the 3-tax-year period. See Pub. 538 for more information. Treating inventory as non-incidental material or supplies.If you account for inventories as materials and supplies that are not incidental, you deduct the amounts paid to acquire or produce the inventoriable items treated as materials and supplies in the year in which they are first used or consumed in your operations. Financial accounting treatment of inventories.Your financial accounting treatment of inventories is determined with regard to the method of accounting you use in your applicable financial statement (as defined in section 451(b)(3)) or, if you do not have an applicable financial statement, with regard to the method of accounting you use in your books and records that have been prepared in accordance with your accounting procedures. Changing your method of accounting for inventory.If you want to change your method of accounting for inventory, you must file Form 3115. For details, see Line F, earlier. More information.For more information about this exception, see Pub. 538.
Line 33Your inventories can be valued at cost, the lower of cost or market, or any other method approved by the IRS. Line 35If you are changing your method of accounting beginning with 2022, refigure last year's closing inventory using your new method of accounting and enter the result on line 35. If there is a difference between last year's closing inventory and the refigured amount, attach an explanation and take it into account when figuring your section 481(a) adjustment. For details, see the example under Line F, earlier. Part IV. Information on Your VehicleLine 44bIn most cases, commuting is travel between your home and a work location. If you converted your vehicle during the year from personal to business use (or vice versa), enter your commuting miles only for the period you drove your vehicle for business. Travel that meets any of the following conditions isn't commuting.
Line 47Specific recordkeeping rules apply to car or truck expenses. For more information about what records you must keep, see Pub. 463. You may maintain written evidence by using an electronic storage system that meets certain requirements. For more information about electronic storage systems, see Pub. 583. Part V. Other ExpensesInclude all ordinary and necessary business expenses not deducted elsewhere on Schedule C. List the type and amount of each expense separately in the space provided. Enter the total on lines 48 and 27a. Do not include the cost of business equipment or furniture; replacements or permanent improvements to property; or personal, living, and family expenses. Do not include charitable contributions. Also, you cannot deduct fines or penalties paid to a government for violating any law. For details on business expenses, see Pub. 535. Amortization. Include amortization in this part. For amortization that begins in 2022, you must complete and attach Form 4562. You can amortize such costs as:
In most cases, you cannot amortize real property construction period interest and taxes. Special rules apply for allocating interest to real or personal property produced in your trade or business. For a complete list, see the instructions for Form 4562, Part VI. At-risk loss deduction. Any loss from this business that was not allowed last year because of the at-risk rules is treated as a deduction allocable to this business in 2022. Bad debts. Include debts and partial debts from sales or services that were included in income and are definitely known to be worthless. If you later collect a debt that you deducted as a bad debt, include it as income in the year collected. For details, see chapter 10 of Pub. 535. Business startup costs. If your business began in 2022, you can elect to deduct up to $5,000 of certain business startup costs. The $5,000 limit is reduced (but not below zero) by the amount by which your total startup costs exceed $50,000. Your remaining startup costs can be amortized over a 180-month period, beginning with the month the business began. For details, see chapters 7 and 8 of Pub. 535. For amortization that begins in 2022, you must complete and attach Form 4562. Deduction for removing barriers to individuals with disabilities and the elderly. You may be able to deduct up to $15,000 of costs paid or incurred in 2022 to remove architectural or transportation barriers to individuals with disabilities and the elderly. However, you cannot take both a credit (on Form 8826) and a deduction for the same expenditures. De minimis safe harbor for tangible property. Generally, you must capitalize costs to acquire or produce real or tangible personal property used in your trade or business, such as buildings, equipment, or furniture. However, if you elect to use the de minimis safe harbor for tangible property, you may deduct de minimis amounts paid to acquire or produce certain tangible property if these amounts are deducted by you for financial accounting purposes or in keeping your books and records. If you have an applicable financial statement, you may use this safe harbor to deduct amounts paid for tangible property up to $5,000 per item or invoice. If you don't have an applicable financial statement, you may use the de minimis safe harbor to deduct amounts paid for tangible property up to $2,500 per item or invoice. Only deduct these amounts as other expenses. Don't include these amounts on any other line. For details on making this election and requirements for using the de minimis safe harbor for tangible property, see chapter 1 of Pub. 535. Energy efficient commercial buildings deduction. You may be able to deduct part or all of the expenses of modifying an existing commercial building to make it energy efficient. For details, see Form 7205 and its instructions. Film and television and live theatrical production expenses. You can elect to deduct costs of certain qualified film and television productions or qualified live theatrical productions. For details, see chapter 7 of Pub. 535. Forestation and reforestation costs. Reforestation costs are generally capital expenditures. However, for each qualified timber property, you can elect to expense up to $10,000 ($5,000 if married filing separately) of qualifying reforestation costs paid or incurred in 2022. You can elect to amortize the remaining costs over 84 months. For amortization that begins in 2022, you must complete and attach Form 4562. The amortization election does not apply to trusts. For details on reforestation expenses, see chapters 7 and 8 of Pub. 535. Paperwork Reduction Act Notice. We ask for the information on Schedule C (Form 1040) to carry out the Internal Revenue laws of the United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to allow us to figure and collect the right amount of tax. You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return information are confidential, as required by section 6103. The time needed to complete and file Schedule C (Form 1040) will vary depending on individual circumstances. The estimated burden for individual taxpayers filing this form is included in the estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is approved under OMB control number 1545-1974 and is shown next.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would be happy to hear from you. See the instructions for the tax return with which this form is filed. Principal Business or Professional Activity Codes
These codes for the Principal Business or Professional Activity classify sole proprietorships by the type of activity they are engaged in to facilitate the administration of the Internal Revenue Code. These six-digit codes are based on the North American Industry Classification System (NAICS). Select the category that best describes your primary business activity (for example, Real Estate). Then select the activity that best identifies the principal source of your sales or receipts (for example, real estate agent). Now find the six-digit code assigned to this activity (for example, 531210, the code for offices of real estate agents and brokers) and enter it on Schedule C, line B. Note. If your principal source of income is from farming activities, you should file Schedule F. Accommodation, Food Services, & Drinking PlacesAccommodation721310 - Rooming & boarding houses, dormitories, & workers' camps
Food Services & Drinking Places722514 - Cafeterias, grill buffets, & buffets Administrative & Support and Waste Management & Remediation ServicesAdministrative & Support Services561430
- Business service centers (including private mail centers & copy shops)
Waste Management & Remediation Services562000 - Waste management & remediation services Agriculture, Forestry, Hunting, & Fishing112900 - Animal production (including breeding of cats and dogs) Support Activities for Agriculture & Forestry115210 - Support activities for animal production (including farriers) Arts, Entertainment, & RecreationAmusement, Gambling, & Recreation Industries713100 - Amusement parks & arcades Museums, Historical Sites, & Similar Institutions712100 - Museums, historical sites, & similar institutions Performing Arts, Spectator Sports, & Related Industries711410 - Agents & managers for artists, athletes, entertainers, & other public figures Construction of Buildings
236200 - Nonresidential building construction Heavy and Civil Engineering Construction237310 - Highway, street, & bridge construction Specialty Trade Contractors238310 - Drywall & insulation contractors Educational Services611000 - Educational services (including schools, colleges, & universities) Finance & InsuranceCredit Intermediation & Related Activities522100 - Depository credit intermediation (including commercial banking, savings institutions, & credit unions) Insurance Agents, Brokers, & Related Activities524210 - Insurance agencies & brokerages Securities, Commodity Contracts, & Other Financial Investments & Related Activities523160 - Commodity contracts intermediation Health Care & Social AssistanceAmbulatory Health Care Services621610 - Home health care services Hospitals622000 - Hospitals Nursing & Residential Care Facilities623000 - Nursing & residential care facilities Social Assistance624410 - Childcare services InformationPublishing Industries513000 - Publishing industries Broadcasting & Content Providers & Telecommunications516000 -
Broadcasting & content providers Data Processing, Web Search Portals, & Other Information Services518210 -
Computing infrastructure providers, data processing, web hosting, & related services Motion Picture & Sound Recording512100 - Motion picture & video industries (except video rental) Manufacturing315000 - Apparel mfg. Chemical Manufacturing325100 - Basic chemical mfg. Food Manufacturing311110 - Animal food mfg. Leather & Allied Product Manufacturing316210 - Footwear mfg. (including leather, rubber, & plastics) Nonmetallic Mineral Product Manufacturing327300 - Cement & concrete product mfg. Mining212110 - Coal mining Other ServicesPersonal & Laundry Services812111 - Barber shops Repair & Maintenance811120
- Automotive body, paint, interior, & glass repair Professional, Scientific, & Technical Services541100 - Legal services Architectural, Engineering, & Related Services541310 - Architectural services Computer Systems Design & Related Services541510 - Computer systems design & related services
Specialized Design Services541400 - Specialized design services (including interior, industrial, graphic, & fashion design) Other Professional, Scientific, & Technical Services541800 - Advertising, public relations, &
related services Real Estate & Rental & LeasingReal Estate531100 - Lessors of real estate (including miniwarehouses
& self-storage units) Rental & Leasing Services532100
- Automotive equipment rental & leasing Religious, Grantmaking, Civic, Professional, & Similar Organizations813000 - Religious, grantmaking, civic, professional, & similar organizations Retail TradeBuilding Material & Garden Equipment & Supplies Dealers444140 - Hardware retailers Clothing & Accessories Retailers458110 - Clothing & clothing accessories retailers Electronic & Appliance Retailers449210 - Electronics & appliance retailers (including computers) Food & Beverage Retailers445320 - Beer, wine, & liquor retailers Furniture & Home Furnishings Retailers449110 - Furniture retailers Gasoline Stations & Fuel dealers457100 -
Gasoline stations (including convenience stores with gas) General Merchandise Retailers455000 - General merchandise retailers Health & Personal Care Retailers456120 - Cosmetics, beauty supplies, & perfume retailers Motor Vehicle & Parts Dealers441300 - Automotive parts, accessories, & tire retailers Sporting Goods, Hobby, Book, Musical Instrument & Miscellaneous Retailers459210 - Book retailers & news dealers (including newsstands) Nonstore Retailers- Nonstore retailers sell all types of merchandise
using such methods as Internet, mail-order catalogs, interactive television, or direct sales. These types of Retailers should select the PBA associated with their primary line of products sold. Transportation & Warehousing481000 - Air transportation Couriers & Messengers492000 - Couriers & messengers
Warehousing & Storage Facilities493100 - Warehousing & storage (except leases of miniwarehouses & self-storage units) Utilities221000 - Utilities Wholesale TradeMerchant Wholesalers, Durable Goods423200 - Furniture & home furnishing Merchant Wholesalers, Nondurable Goods424300 -
Apparel, piece goods, & notions Wholesale Trade Agents & Brokers425120 - Wholesale trade agents & brokers 999999 - Unclassified establishments (unable to classify) Page Last Reviewed or Updated: 30-Nov-2022 Which of the following statements is true of regressive taxation?The correct answer is d.
Regressive tax means when the percentage of income paid in taxes decreases as income increases. A flat tax is a proportional tax as government imposes the same percentage of tax on every individual irrespective of their income.
What are the three main stages of the policy making process quizlet?Terms in this set (5). Step 1: Agenda setting. Getting a problem on the list of subjects to which policymakers are paying serious attention.. Step 2: Alternative formulation. devising the possible solutions to the problem.. Step 3: Decision making. ... . Step 4: Implementation. ... . Step 5: Evaluation.. Where is policy implementation generally handled?Most public policies are carried out by administrative agencies in the executive branch, although sometimes the courts get involved in implementing decisions they make. Agencies use many techniques to see that policy is carried out.
What is the largest single government program quizlet?The largest single federal transfer program in the United States is the unemployment insurance program.
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All of the following are benefits of an increased federal tax on gasoline except
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