How to fill out Schedule C, line by line

• Start with the business details and status questions

• Part I: calculate gross income on lines 1–7

• Part II: enter expenses, then handle vehicle, meals, and home use correctly

• Lines 28–32: calculate and report profit or loss

• Parts III–V: inventory, vehicle information, and other expenses

Start with the business details and status questions

Use Schedule C for a qualifying business operated as a sole proprietor, a statutory-employee route, certain qualified joint ventures, and specified Form 1099 amounts. Attach it to the applicable return. Partnerships generally file Form 1065 instead. If you have more than one business, complete a separate Schedule C for each business.

Lines A–F: identify the business and accounting method

The header identifies the particular business this schedule represents. In line A, describe the principal activity that produced the principal source of line 1 income, including the general field and product or service. Line B is the six-digit code from the IRS Principal Business or Professional Activity Codes chart. Enter a business name on line C only if there is a separate one.

Line D is not a place to copy an EIN from a payer’s Form 1099. Enter an EIN issued to you when applicable; otherwise leave it blank. Use a street address on line E unless you conducted the business from the home address already shown on the return. An estate or trust filer enters its EIN on line D and does not complete the SSN block.

For line F, select the accounting method the business uses: cash, accrual, or another permitted method. The method must clearly reflect income. Cash-method reporting generally follows income actually or constructively received and expenses actually paid; accrual reporting follows its own timing rules. Inventory can affect this choice, and a change of accounting method generally requires Form 3115.

Lines G–J: participation, a new business, and Forms 1099

Line G asks whether you materially participated in the business during 2025. For a nonrental activity, check Yes if you meet an IRS material-participation test or the oil-and-gas exception applies. A No answer means the activity is passive for these rules, so a loss may need Form 8582. Line G does not apply to Form 1040-SS filers.

Check line H if the business was started or acquired in 2025. This also includes a business reopened or restarted after a temporary closure when no 2024 Schedule C was filed for it. On line I, answer Yes only if 2025 payments would require Forms 1099; line J then asks whether the required forms were or will be filed. Lines I and J are not a substitute for the underlying Form 1099 filing analysis.

• government form instructions

Part I: calculate gross income on lines 1–7

Part I starts with business receipts and produces line 7 gross income—the amount from which Part II expenses are later subtracted. The intermediate totals matter because returns and cost of goods sold are not additional expense deductions.

Lines 1–7: receipts, returns, cost of goods sold, and other income

Enter gross trade-or-business receipts or sales on line 1. Check Forms 1099 against that amount: if total Form 1099-NEC box 1 amounts exceed line 1, attach a statement explaining the difference. Enter customer returns and allowances as a positive number on line 2. A statutory employee reports W-2 box 1 income here and checks the line 1 box; statutory-employee income and self-employment income require separate Schedules C.

1. Line 3: subtract line 2 from line 1.

2. Line 4: enter cost of goods sold from Part III, line 42, when that calculation applies.

3. Line 5: subtract line 4 from line 3 for gross profit.

4. Line 6: enter qualifying business income not reported elsewhere in Part I.

5. Line 7: add lines 5 and 6 for gross income.

Part II: enter expenses, then handle vehicle, meals, and home use correctly

Part II is not a general list of everything the business paid. Put each ordinary business cost on its labeled line first, and do not include costs that must be capitalized to inventory or other property. The specialist routes below matter because they change the calculation or prevent the same cost from being entered twice.

Lines 8–27b: classify business costs before totaling them

Use the printed categories: advertising; car and truck expenses; commissions and fees; contract labor; depreciation and section 179; employee benefits; insurance other than health; interest; professional services; office expense; employee retirement plans; rent or lease; repairs; supplies; taxes and licenses; travel and meals; utilities; and wages. Contract labor on line 11 is not employee wages on line 26. Line 13 is for depreciation and section 179, and may require Form 4562. Mortgage interest reported on Form 1098 belongs on line 16a; other qualifying interest goes on line 16b.

Line 24a is for qualifying overnight business travel, not meals or entertainment. Put deductible business meals on line 24b. In most cases, the deduction is 50% of qualifying business meal expenses; a stated Department of Transportation exception uses 80%. For line 25 utilities, do not deduct the base rate of the first telephone line into a residence. Line 26 excludes amounts paid to yourself and is reduced by applicable employment credits.

Line 27a is for the energy efficient commercial buildings deduction and requires Form 7205. Part V is narrower than a catch-all: list ordinary and necessary expenses not deducted on lines 8–27a or line 30, total them on line 48, and transfer that total to line 27b. Do not list equipment or furniture, permanent improvements, personal expenses, charitable contributions, or government-law fines and penalties there.

Line 9 and Part IV: car and truck expenses

Choose one route based on the IRS conditions for the vehicle.

Actual expenses are required when five or more vehicles were used simultaneously in the business. A leased vehicle cannot use actual expenses if you previously used the standard mileage rate for that vehicle. Complete Part IV only when claiming line 9 car or truck expense and not required to file Form 4562 for the business. If vehicle depreciation is claimed, or Form 4562 is otherwise required, use Form 4562 Part V for the vehicle information instead.

Line 30: business use of your home

Line 30 receives a calculated result, not an amount repeated elsewhere in Part II. Use Form 8829 unless you elect the simplified method. Under that method, complete the Simplified Method Worksheet, enter the home and business-use square footage in the line 30 spaces, and transfer the worksheet result. In most cases, the worksheet applies $5 to qualifying square footage, limited to 300 square feet and the gross-income limitation.

Lines 28–32: calculate and report profit or loss

These lines turn gross income and classified expenses into the Schedule C result. The arithmetic is straightforward, but a loss is not always the amount that can finally be entered on line 31.

1. Line 28: add lines 8 through 27b for total expenses before business use of home.

2. Line 29: subtract line 28 from line 7 for tentative profit or loss.

3. Line 31: subtract line 30 from line 29, subject to the loss rules.

Line 31: where net profit or loss goes

For individuals, net profit generally goes on Schedule 1 (Form 1040), line 3, and Schedule SE, line 2. Estates and trusts report it on Form 1041, line 3. Statutory employees enter their Schedule C result on Schedule 1 but do not report that statutory-employee income on Schedule SE. A loss may also require Form 461 for the excess-business-loss limitation; this page does not determine whether that limitation applies.

Line 32: at-risk status when there is a loss

Do not complete line 32 when line 7 exceeds the total of lines 28 and 30. When there is a loss, line 32 asks whether all investment is at risk. If some investment is not at risk, check line 32b and attach Form 6198. The at-risk rules generally limit a loss to the amount you could actually lose in the business. Apply Form 6198 first; if line G is No, the passive-activity rules may then require Form 8582 before the loss is finalized on line 31.

Parts III–V: inventory, vehicle information, and other expenses

Page 2 supports page 1. Part III produces the cost-of-goods-sold amount for line 4, Part IV supplies vehicle information only in its stated circumstances, and Part V produces the other-expenses amount for line 27b.

Part III: cost of goods sold, lines 33–42

Complete Part III when inventory and cost of goods sold apply. Select the closing-inventory valuation method on line 33, and attach an explanation if quantities, costs, or valuations changed between opening and closing inventory on line 34. Add beginning inventory, purchases less personal withdrawals, labor excluding amounts paid to yourself, materials and supplies, and other costs on line 40. Subtract ending inventory on line 41 to get line 42, then transfer line 42 to line 4. If beginning inventory differs from last year’s closing inventory, attach an explanation.

Part V: list expenses not claimed elsewhere

List each qualifying other expense type and amount separately in Part V. Add the entries for line 48, then enter that total on line 27b—not as a second deduction somewhere else. Part IV, if applicable, records vehicle service date, business, commuting, and other mileage, personal-use availability, and supporting evidence.

Sources and how this page was made

This guide explains the official sources listed below in plain language. Displayed amounts, limits, percentages, and timing rules come from that material.

Source revision reflected in this guide: Form: 2025; Instructions: 2025.

• Official form: 2025 Schedule C (Form 1040) — IRS

• Official form instructions: Instructions for Schedule C (Form 1040) (2025) | Internal Revenue Service — IRS