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What is Schedule C?

Reviewed by Nancy Mcmaster, CPA August 2026

Short answer

Schedule C (Profit or Loss from Business) is used by sole proprietors, freelancers, independent contractors, and single-member LLCs to report business income and expenses. Schedule C is attached to Form 1040 (your federal income tax return), and calculates your net profit or loss—gross income minus deductible expenses—and that number flows directly to your tax return. If your net self-employment earnings are $400 or more, you’ll also owe self-employment tax on top of income tax.

See details

What Schedule C is used for

With Schedule C you can:

  • Report your net profit or loss for income tax purposes.
  • Use net earnings, which then flows to Schedule SE to calculate self-employment tax (Social Security and Medicare taxes).

What goes on Schedule C

PartWhat it covers
Part IIncome: total receipts minus returns and allowances, further reduced by cost of goods sold as detailed in Part III.
Part IIBusiness expenses such as: advertising, vehicle, home office, insurance, legal/professional fees, deductible meals (50%), rent, supplies, utilities, wages. Expenses must be ordinary (common for your industry) and necessary (appropriate for the business).
Part IIICost of goods sold: for businesses that produce, purchase, or sell merchandise to produce income.
Part IVVehicle information: required if you claim a vehicle deduction.
Part VOther expenses not listed in Part II.

Source: Internal Revenue Service

Note: For vehicle expenses, you may be able to use either the standard mileage rate ($0.70/mile for 2025 and $0.76/mile for 2026) or the actual expense method, depending on your circumstances and IRS rules

Who needs to file Schedule C

You typically need to file Schedule C if you have income from:

  • A sole proprietorship
  • Freelance work
  • Gig economy jobs
  • A single-member LLC not taxed as a corporation

This applies even if you have a full-time W-2 job and self-employment is a side hustle. Net earnings below $400 don’t trigger self-employment tax, but may still need to be reported.

Schedule C deductions freelancers often miss

  • Home office deduction: To deduct home office expenses, you must use the space regularly and exclusively for business.
  • Retirement contributions: Deductible contributions to a SEP-IRA, Solo 401(k), or other qualified retirement plan can reduce your taxable income, but they don’t reduce self-employment tax.
  • Platform fees and subscriptions: App fees, software, professional memberships, and business-related phone/internet (business-use percentage).
What Is Self-Employment Tax? What self-employed tax deductions can I claim? How does the home office tax deduction work? What is the self-employed health insurance deduction? How do quarterly estimated tax payments work? What's the difference between earned and unearned income?