Schedule C
PrerequisitesYou should be familiar with or have completed the Interactive Input exercise in the Input Techniques section (Program Operations tutorial) ObjectiveIn this exercise, you will enter income and deductions in Screen 16, Business Income (Sch. C) using the Interactive Input method and review the results on Form 1040. FactsEnter the following information for a sample client: |
| Client number | TUTSCHC1 |
| Client name | Sole Proprietor |
| Filing Status | Single |
| Schedule C | Data entry: |
| Principal business or profession | Special Events |
| Principal business code | 561900 |
| Accounting method | 1 (Cash) |
| Gross receipts or sales | $50,000 |
| Advertising | $2,000 |
| Legal and professional | $3,000 |
| Office expense | $650 |
| Supplies | $2,000 |
Program Considerations
- The program assumes that Schedule C entities are non-passive, owned by the taxpayer, use the cash accounting method, and are subject to self-employment tax. Input fields are available to change each of these assumptions.
- The format of the Schedule C input follows the flow of the IRS Schedule C.
- The program uses the entries in Client Information for the taxpayer name and address on the Schedule C. Overrides are available if this information is different.
- The program calculates self-employment taxes automatically if net earnings from self-employment are $400 or more.
- Options are available to suppress Schedule C-EZ and print or suppress the Schedule C Optional Statement. This statement prints amounts and descriptions for Other Income and Other Costs as supporting statements. For additional information on setting this option refer to the Tax Return exercise in the Before You Prepare a Return section (Program Operations tutorial). You can also suppress Schedule C-EZ on a per client, per schedule basis in the General Information section of Screen 16, Business Income .
How?
To enter Schedule C input:
- Open the sample client.
- Open the Business Income (Sch. C) screen from the Contents tab.
- Enter the information from the Schedule C table above in the appropriate input fields.
To view the input for a different Schedule C:
- Click the schedule in the Schedule list.
To add a new Schedule C:
- Click the Add button at the bottom of the Schedule list.
To delete a Schedule C:
- Click the schedule in the Schedule list.
- Click the Delete button at the bottom of the Schedule list.
Tips & Shortcuts
You can press [Ctrl]+[A] to add another Schedule C.
Review
You should have entered the Schedule C information for the sample return and produced the following results on Form 1040:
| Line 12 - Business Income | $42,350 |
| Line 27 - 1/2 of Self Employment Tax | $2,992 |
| Line 37 - Adjusted Gross Income | $39,358 |
| Line 43 - Taxable Income | $31,158 |
| Line 63 - Total tax | $10,443 |
Troubleshooting
Problem: The program is not producing Schedule C-EZ for the sample client.
Solution: Schedule C-EZ can only be used when expenses are $5,000 or less.