Key Takeaways

  • Schedule C-EZ was a simplified form for sole proprietors and self-employed individuals with uncomplicated businesses, but the IRS discontinued it after tax year 2018.
  • Taxpayers who once qualified for Schedule C-EZ must now use Schedule C to report income and expenses.
  • Eligibility for Schedule C-EZ was limited—no employees, no inventory, expenses under $5,000, and no depreciation or amortization.
  • Filing Schedule C-EZ was quicker because it allowed most expenses to be reported in a single line instead of itemizing.
  • Even when using Schedule C-EZ, taxpayers had to calculate self-employment taxes with Schedule SE.
  • Understanding the history of Schedule C-EZ helps self-employed taxpayers prepare for Schedule C today.

What Is a Schedule C-EZ?

A Schedule C-EZ is used to report the profit that relates solely to your small business. 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 also report your income or losses in 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 net business profits in 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 use the Schedule C-EZ one year doesn’t imply you are qualified to use it for all future tax years.

IRS Discontinuation of Schedule C-EZ

While Schedule C-EZ provided a simpler option for many small business owners, the IRS discontinued the form beginning with the 2019 tax year. The IRS determined that maintaining both Schedule C and Schedule C-EZ caused unnecessary duplication and confusion. Now, all sole proprietors, regardless of business size or complexity, must file Schedule C (Form 1040).

If you come across references to Schedule C-EZ, it is important to know that they apply only to returns filed for tax years prior to 2019. For current and future filings, you must use Schedule C. This change has made it more important than ever for small business owners to keep detailed records of their income and expenses.

What Is the Difference Between Schedule C-EZ and Schedule C?

Schedule C-EZ is a basic version of Schedule C that can be used if you had only one business (statutory employee, sole proprietorship, or joint venture) and the business:

  • Follows the cash method
  • Has less than $5,000 of expenses
  • Has no net losses
  • Does not carry 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 unallowed passive activity losses within the last year

Advantages of Schedule C-EZ Before It Was Retired

Before its elimination, Schedule C-EZ offered several advantages for taxpayers who qualified:

  • Time savings: The form was only one page, compared to the multi-page Schedule C.
  • Less recordkeeping: Instead of categorizing expenses into multiple categories, taxpayers could list their total business expenses on a single line.
  • Reduced complexity: Taxpayers without employees, depreciation, or inventory avoided the complications of the full Schedule C.

These benefits made Schedule C-EZ especially appealing to freelancers, consultants, gig workers, and small service providers who typically had straightforward financial operations.

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

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

Who Typically Qualified for Schedule C-EZ

In practice, the following types of taxpayers often qualified to use Schedule C-EZ when it was available:

  • Freelancers and gig workers (writers, designers, drivers, and delivery workers)
  • Independent consultants with minimal operating expenses
  • Small sole proprietorships without employees or large equipment purchases
  • Side businesses where annual expenses rarely exceeded $5,000

For these groups, the simplified process saved time during tax season. However, any business with higher expenses, inventory, or depreciation had to file the longer Schedule C.

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

Schedule C lists the enterprise earnings and losses and calculates the net 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 net business. In addition, you will need to determine your net revenue. Total your gross receipts from your business.

You will need to subtract expenses from receipts to calculate earnings. If your business expenses 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,” for your earnings, expenses, and car, in the event that an audit is issued on your returns.

Submitting Your Schedule C-EZ

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

Transitioning From Schedule C-EZ to Schedule C

Since Schedule C-EZ is no longer available, taxpayers who previously used it must transition to Schedule C. While this form is more detailed, many of the required entries—gross income, expenses, and mileage deductions—are already familiar to former Schedule C-EZ filers.

To ease the transition:

  • Gather receipts and records for all business-related purchases.
  • Use accounting software or spreadsheets to categorize expenses by type.
  • Review IRS instructions for Schedule C, which provide line-by-line guidance.

Though more detailed, Schedule C ensures that all taxpayers report their business activities consistently and claim all eligible deductions.

Schedule C-EZ and Self-Employment Taxes

Small companies that file a Schedule C-EZ for their business taxes should also 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 individual tax return.

Recordkeeping Best Practices for Self-Employed Taxpayers

Even though the simplified form no longer exists, the underlying requirement for accurate recordkeeping remains. To avoid problems with audits or missed deductions, self-employed individuals should:

  • Maintain separate bank accounts for personal and business expenses.
  • Keep digital or paper receipts organized by category.
  • Track mileage and vehicle use with a log or mileage app.
  • Store records for at least three years in case the IRS requests verification.

Good recordkeeping not only supports accurate reporting on Schedule C but also ensures you maximize allowable deductions, lowering your overall tax burden.

Frequently Asked Questions

  1. Is Schedule C-EZ still available?
    No. The IRS discontinued Schedule C-EZ starting with the 2019 tax year. All self-employed taxpayers must now file Schedule C.
  2. Why did the IRS eliminate Schedule C-EZ?
    The IRS retired it to reduce duplication and simplify tax administration, requiring everyone to use Schedule C instead.
  3. Who qualified for Schedule C-EZ before it was discontinued?
    Taxpayers with less than $5,000 in expenses, no employees, no depreciation, and no inventory typically qualified.
  4. How does Schedule C compare to Schedule C-EZ?
    Schedule C is more detailed, requiring expenses to be categorized, but it allows all deductions available to self-employed taxpayers.
  5. Do I still need Schedule SE for self-employment taxes?
    Yes. Whether using the old Schedule C-EZ or today’s Schedule C, self-employed individuals must complete Schedule SE to calculate Social Security and Medicare taxes.

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