A Schedule C-EZ: Everything You Need to Know

Schedules C and C-EZ are used to report the earnings and bills that relate solely to your self-employment actions. If you are self-employed, it can be more difficult to file your tax return than if you just earn a salary as an employee. Fortunately, you can use something called a Schedule C-EZ to make the tax return process easier for yourself.  If you qualify, the Schedule C-EZ can be a much easier and faster process for filing your taxes and should strongly be considered.

You should additionally report your revenue or losses within the earnings section of your 1040 form. Before deciding if you qualify for the Schedule C-EZ, you need to first understand whether you are classified as self-employed.

You can be considered self-employed if you run your own business, be it a sole proprietorship or an LLC in which you are the only owner. If you’re an independent contractor, you may also qualify as self-employed.  

As you prepare a Schedule C, you will need to report your online business bills within the applicable classes listed on the form, like promoting, insurance coverage, and hiring bills, among others. The Schedule C-EZ is easier to organize because it permits you to report multiple expenses on a single line as opposed to listing them individually by class. Do not forget that you will need to make this analysis every tax year—eligibility to make use of the Schedule C-EZ one year doesn’t imply you need to use it for all future tax years.

Difference Between Schedule C-EZ Differ and Schedule C?

The term Schedule C-EZ is a basic model for the Schedule C that is used when a taxpayer owns only one business. This could be in the form of a sole proprietorship, joint venture, or employee. The business must:

  • Follow the cash method
  • Have less than $5,000 of expenses
  • Have no net losses
  • Does not carry stock or inventory
  • Does not have workers
  • Is not required to file Form 4562 for amortization and depreciation
  • Does not have expenses for the office
  • Does not have activity losses within the last year

Should I Use Schedule C or C-EZ to Report Income?

Even when your self-employment earnings is not very much, you must continue to report it to the Internal Revenue Service. If you own an unincorporated small enterprise by yourself, the IRS considers you a sole proprietor. Schedule C is titled "Revenue or Loss from Enterprise." In the event that you run two or extra sole proprietorships, you will need to file a Schedule C for each. The IRS will not penalize you for taking each professional enterprise deduction you can.

Can I File Schedule C-EZ Instead of Schedule C?

Schedule C lists the enterprise earnings and bills and calculates the web earnings of the enterprise.

Learn How to Complete a Schedule C-EZ

When completing the Schedule C-EZ form, you will need to fill in the final details about your online business. In addition, you will need to determine your internet revenue. Total your gross receipts from your online business.

You will need to subtract bills from receipts to calculate revenue. If your business bills are higher than $5,000, you will not be able to use Schedule C-EZ; you will have to use Schedule C. When completing the Schedule C-EZ form, you will need to present details about how the car was used for business purposes, if you're claiming it. You must have all of the information, or “evidence,” in your earnings, expenses, and car, in the event that an audit is issued on your returns.

Submitting the IRS Your Schedule C-EZ

You'll include the Schedule C-EZ with your private tax return.

Schedule C-EZ and Self-Employment Taxes

Small companies that file a Schedule C-EZ for their business taxes should additionally pay self-employment taxes (Social Security and Medicare tax) on the revenue of these companies. You will want to finish Schedule SE to calculate your self-employment tax and add that to your earnings tax in your private tax return.

If you need help completing your Schedule C-EZ, you can post your job on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.