Schedule C: Profit or Loss From Business (2026)
Report your self-employed income and business deductions — then calculate the tax on your net profit.
Schedule C (Form 1040) reports the income and expenses of a sole proprietorship or single-member LLC. You subtract business expenses from gross receipts to get net profit, which flows to Form 1040 and to Schedule SE for self-employment tax. Anyone with 1099/self-employed income generally files one Schedule C per business.
Who files Schedule C
- Sole proprietors and independent contractors who received 1099-NEC/1099-K income.
- Single-member LLC owners (unless they elected corporate taxation).
- Gig and freelance workers — rideshare, delivery, design, consulting, and more.
- Anyone running a business as an individual, even a profitable side hustle.
How Schedule C works, line by line
Part I totals your income: gross receipts (Line 1), minus returns and cost of goods sold, gives gross profit. Part II lists your deductible business expenses by category — advertising, car and truck, supplies, insurance, and so on — plus a catch-all for other expenses. Subtracting total expenses from gross profit gives your net profit or loss on Line 31.
That net profit is the number that matters: it flows to Form 1040 as income and to Schedule SE, where the 15.3% self-employment tax is calculated. Legitimate deductions lower both your income tax and your SE tax, so tracking them carefully is the single biggest lever for a self-employed filer.
Deductions people miss
- Business mileage at the 2026 standard rate (or actual vehicle costs).
- Home office (via Form 8829 or the simplified method).
- Health insurance premiums (self-employed health insurance deduction).
- Half of your self-employment tax (an above-the-line adjustment).
- Retirement contributions to a SEP or Solo 401(k).
Frequently asked questions
Who has to file Schedule C?
Anyone with self-employment or 1099 income from a business they run as an individual or single-member LLC. You file a separate Schedule C for each distinct business.
What's the difference between Schedule C and Schedule SE?
Schedule C calculates your business net profit. Schedule SE then uses that profit to calculate the 15.3% self-employment tax (Social Security + Medicare). You typically file both.
Can I deduct a loss on Schedule C?
Yes. If expenses exceed income, the loss generally offsets your other income, subject to at-risk and hobby-loss rules. Repeated losses can draw IRS scrutiny about whether the activity is a real business.
Do I need Schedule C for a hobby?
No. Hobby income is reported differently and hobby expenses aren't deductible. Schedule C is for activities run with a profit motive as a business.
Sources & verification
Last reviewed July 12, 2026.