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This article is for educational purposes and does not constitute legal, financial, or tax advice. For specific advice applicable to your business, please contact a professional. Nothing in this article constitutes tax or accounting advice. If you have questions about Form 1040, please consult a professional.
Taxes can be an overwhelming time of the year. With so many forms to keep in mind, looking ahead to what you might need for your business’s annual tax filings can save a last-minute scramble. If you are a self-employed small business owner, a member of a partnership, a single-member LLC, or a small business owner who runs your company as a sole proprietor you may need to file a Form 1040. Here’s what you need to know:
What is Form 1040?
Form 1040 is a two-page document used for annual income tax returns. While most taxpayers use Form 1040 to file taxes, this form is also relevant for small businesses with assets under $10 million. Form 1040 should be filed on April 15. However, due to extended deadlines in 2020, this date is subject to change. The form itself will require you to share personal data such as your Social Security Number, as well as tax calculations that include income, standard or itemized deductions, taxable income, and more.
How do I file Form 1040?
The IRS offers a downloadable version of Form 1040 that you can download and fill out, but if you are using a tax software program, there is likely an option to walk through the filing step by step. Whether you choose to fill out the form yourself through IRS Free File, use a tax software, or hire a professional tax preparer, there are several options for filing Form 1040.
What is schedule C for Form 1040?
There are several schedules for Form 1040. Of these schedules, Schedule C and Schedule C-EZ may be relevant to your small business tax filings. While taxpayers typically file annually, if you are a small business owner, you may need to file an additional Schedule along with your Form 1040.
For sole proprietorships or LLCs where you are the sole owner, a Schedule C, for example, allows you to report your business income and expenses as an attachment to your personal income tax return. This form allows you to report income or loss from your business.
Below is a breakdown of all the schedules associated with Form 1040 and 1040-SR.
|Schedule for Form 1040 and Form 1040-SR||More about the Schedule|
|Schedule A – Itemized Deductions||This schedule is used by filers to report itemized deductions.|
|Schedule B – Interest and Ordinary Dividends||This schedule is used by filers to report interest and ordinary dividend income.|
|Schedule C – Profit or Loss from Business (Sole Proprietorship)||Schedule C (Form 1040) is used to report income or loss from a business operated, or a profession practiced, as a sole proprietor.|
|Schedule C-EZ – Net Profit from Business (Sole Proprietorship)||Schedule C-EZ is used instead of Schedule C by qualifying small businesses and statutory employees with expenses of $5,000 or less.|
|Schedule D – Capital Gains and Losses||Schedule D is used to report sales, exchanges, or some involuntary conversions of capital assets, certain capital gain distributions, and nonbusiness bad debts.|
|Schedule E – Supplemental Income and Loss||Schedule E is used to report income from rental properties, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs.|
|Schedule EIC – Earned Income Credit||Schedule EIC (Form 1040 or 1040-SR) is used by filers who claim the earned income credit to give the IRS information about the qualifying child.|
|Schedule F – Profit or Loss from Farming||Schedule F (Form 1040) is used to report farm income and expenses.|
|Schedule H – Household Employment Taxes||Schedule H is used by household employers to report household employment taxes.|
|Schedule J – Income Averaging for Farmers and Fishermen||Schedule J is used to figure your income tax by averaging all or part of your taxable income from your trade or business of farming or fishing.|
|Schedule R – Credit for the Elderly or the Disabled||Schedule R (Form 1040) is used to figure the credit for the elderly or the disabled.|
|Schedule SE – Self-Employment Tax||Schedule SE (Form 1040) is used by self-employed persons to figure the self-employment tax due on net earnings.|
|Schedule 8812 – Additional Child Tax Credit||Schedule 8812 (Form 1040) is used to figure the additional child tax credit.|