Your business may be eligible to use the abbreviated Schedule C-EZ instead of the longer Schedule C when reporting business profit and loss on your last year’s federal income tax return. According to the IRS, the deductible business expense threshold for filing Schedule C-EZ of the Form 1040 is $5,000.
Schedule C-EZ, Net Profit from Business (Sole Proprietorship), is the simplified, or easy, version of Schedule C, Profit or Loss from Business (Sole Proprietorship).
You may be eligible to file Schedule C-EZ if you meet the following criteria:
- You only operate one sole proprietorship
- You have less than $5,000 in business expenses
- You are reporting a net profit
- You don’t hold any business inventory like supplies or parts to make products
- You don’t have any employees
- You aren’t claiming any home office deductions
Schedule C-EZ consists of an instruction page and a one-page form with three short parts:
- General Information
- Figure Your Net Profit
- Information on Your Vehicle
The instruction page includes a worksheet for figuring out the number of deductible expenses. If that amount does not exceed $5,000, you should be able to use the C-EZ instead of Schedule C.
Contact J Kelly & Associates to learn more about business tax deductions!