Who Files Schedule C
You file Schedule C with your Form 1040 if you run a business as a sole proprietor, meaning you own an unincorporated business by yourself. A single-member LLC can usually use it too. Additionally, if spouses jointly own and run an unincorporated business, they may be able to elect qualified joint venture treatment instead of filing as a partnership. Each spouse then files a separate Schedule C and Schedule SE, splitting the income and expenses according to each spouse’s share of the business.
Net earnings are your business income minus your business expenses. Under IRS Publication 334, you must file if your net earnings from self-employment are $400 or more. Report all business income, even if a client never sends you a Form 1099.
Learn more about how Schedule C works.
How the IRS Decides What’s Deductible
Publication 334 says an expense must be both ordinary and necessary. Ordinary means common and accepted in your field. Necessary means helpful and appropriate for your business, though it doesn’t have to be indispensable.
If a cost is partly personal, like a phone you also use for family calls, deduct only the business part.
Common Schedule C Deductions
Schedule C sorts expenses that pass this test into categories. This list covers many, but not all, of them.
| Category | What it can include |
|---|---|
| Advertising | Costs to promote your business |
| Car and truck | Business driving |
| Contract labor | Payments to freelancers you hire |
| Insurance | Business insurance premiums |
| Legal and professional fees | Fees charged by accountants and attorneys |
| Office expense | Office supplies and postage |
| Rent or lease | Business property or equipment you rent |
| Taxes and licenses | Business taxes and license fees |
| Utilities | Utility costs for your business only |
| Wages | Salaries and wages paid to employees |
The form also includes depreciation, which spreads the cost of equipment like a laptop over several years. Section 179 and 100% bonus depreciation may let you deduct the cost of qualified property in the first year instead.
Business meals have their own limit. The Schedule C instructions say you can generally deduct only 50% of the cost. For more ideas, browse these self-employed tax deductions.
Rules for Business Mileage and Home Offices
Business Mileage
If you drive for business, you can deduct business miles at a standard rate. For 2026, the IRS standard mileage rates are $0.725 per mile for miles driven Jan. 1–Jun. 30 and $0.76 per mile for Jul. 1–Dec. 31. Keep a mileage log with the date of each business trip, since the rate changed midyear.
Home Office
You may be able to deduct part of your home if you use that space regularly and exclusively for business. The simplified home office option allows $5 per square foot, up to 300 square feet, for a maximum of $1,500.
The regular method uses your actual expenses, figured on Form 8829. With either method, your deduction can’t exceed the business income from that space. Here’s more on how the home office deduction works.
Self-Employed Deductions That Go on Schedule 1
Two common self-employed deductions go on Schedule 1, which lists adjustments that lower your taxable income.
Half of Self-Employment Tax
Self-employment tax is the Social Security and Medicare tax you pay when you work for yourself. The rate is 15.3% (12.4% Social Security plus 2.9% Medicare), calculated on 92.35% of your net earnings. You can deduct half of this tax on Schedule 1.
Health Insurance
If you pay for your own health coverage, you may be able to deduct premiums for you and your family on Schedule 1. Don’t list your own premiums on Schedule C.
