A schedule C is a tax schedule where someone who is either self-employed or receives a 1099 report on his or her income. This schedule is used to report income or loss from a business of the individual that had worked in or a profession the individual had practiced. The person that would need a schedule C would need to fill it out on his own if he or she is self-employed.
When one receives a 1099-MISC with income in box 7 that is for non-employee compensation the IRS will require this income to be reported on a schedule C. The minimum income to file a schedule C for self-employment taxes would start at $400 or more. You should also use a schedule C to report wages and expenses you had as a statutory employee.
Any activity would qualify as a business if your primary purpose that engages in the activity for income or profit. The purpose of a schedule C form is to report how much money you made or lost in the business you take part in.
On a schedule C form there are different parts and steps you would need to fill out. First, you would need to list all the income of your business and calculate your gross profit. Then, subtract all business expenses and calculate your net profit or net loss. By doing this it will be the representation on your income tax return.
A schedule C-EZ is another type of the schedule C except it has less details in the form and only contains total business receipts and business expenses. You can only use a schedule C-EZ only if you operate one sole proprietorship. What is a sole proprietorship? Sole proprietorship is a business that operated and controlled by you and is not set up as a legal business entity such as a corporation or partnership.
Typically when an underwriter is looking at a borrower who declares Schedule C income they want to see a two year average of this type of income.