Schedule C Worksheet for Self-Employed Filers and Contractors tax year Part 1: Business Income and Expenses

Transcription

1 Schedule C Wrksheet fr Self-Emplyed Filers and Cntractrs tax year 2017 This dcument will list and explain the infrmatin and dcumentatin that we will need in rder t file a tax return fr a self-emplyed persn, a cntract wrker, r a sle-prprietr f a business. In summary, we need these surces f infrmatin: Infrmatin and dcumentatin f business incme and expenses (explained in Part 1) Last year s cmplete tax return, including all accmpanying schedules and frms Part 1: Business Incme and Expenses INCOME Prfessin / type f wrk T calculate yur grss incme (revenue befre business peratinal expenses are deducted), we need yu t prvide several figures: Grss receipts This is the ttal f all mnies received (sales) frm yur business activities. This des nt include any mney received frm business lans, investrs (including yu, the wner), r the sale f fixed assets (like ld equipment). It des include 1099-MISC incme. NOTE: D nt cunt sales tax yu cllected and paid t the state as incme r expense. Ttal Cst f Gds Sld This includes: Purchases f inventry Purchases f materials, parts, ingredients, r ther supplies directly used in prducing r prcuring yur prduct Packaging r shipping expenses, when nt paid by custmers r accunted fr elsewhere The value f any year-end inventry will be subtracted frm the csts yu paid ut ver the year; if yu had inventry left at year end, list that amunt. Grss receipts Cst f Gds Sld Year-end inventry value Other business incme This will nt be relevant t mst businesses. If yu have business-related incme frm surces ther than yur actual business activities, include this incme here. Such incme may include grants, awards, r prizes received by yur business scrap sales recvered bad debt earnings frm investments held by the business (nt by yu persnally) federal r state gasline r fuel tax credits r refunds miscellaneus business incme Other business incme 1

2 EXPENSES T be deductible, a business expense must be bth rdinary and necessary. An rdinary expense is ne that is cmmn and accepted in yur field f business. A necessary expense is ne that is helpful and apprpriate fr yur business. An expense des nt have t be indispensable t be cnsidered necessary. PLEASE NOTE that if yur expenses exceed yur incme (that is, yu have a business lss) we will NOT be able t file yur return and will refer yu t MyFreeTaxes r a paid prfessinal preparer. T file with us, yu need t bring a breakdwn f yur deductible business expenses subttaled by categry. The VITA vlunteers cannt g thrugh lists f individual expenses r cllectins f receipts t rganize r subttal yur expenses fr yu. The expense categries used n the Schedule C are listed belw, with examples and ntes. It is up t yu t determine int what categries yur individual expenses fall. In sme cases, an individual expense culd be cnsidered ne f several types f expenses (example: yu might cnsider a printer cartridge t be an ffice expense; anther persn might call it supplies). Chse what makes sense t yu just be cnsistent, and be sure yu d nt cunt the same individual expense mre than nce. TYPES OF DEDUCTIBLE EXPENSES: Advertising, and related marketing expenses, including: Business cards Newspaper r ther print ads Brchures Radi / TV ads Flyers Signs Website design and maintenance Business Use f Hme If yu use a prtin f yur hme as yur principal place f business, yu may be able t deduct part f yur rent r mrtgage, as well as certain ther relevant hme expenses. The part f yur hme used fr business generally must be used exclusively and regularly fr business purpses; in-hme childcare businesses are treated differently. Fill ut the Business Use f Hme wrksheet n page 6 f this checklist if yu have relevant business use f hme expenses. Fr mre infrmatin r fr assistance calculating yur allwable deductin, see IRS Publicatin 587, Business Use f Yur Hme. Advertising Business use f hme: See Part 2 wrksheet n last page 2

3 Car and truck expenses Yu may deduct car/truck expenses fr lcal r extended business travel, including: between ne wrkplace and anther, t meet clients r custmers, t visit suppliers r prcure materials, t attend meetings, fr ther rdinary and necessary managerial r peratinal tasks r needs f yur business. Yu cannt deduct the csts f driving yur car r truck between yur hme and yur main r regular wrkplace. These csts are persnal cmmuting expenses. Yu shuld have kept a recrd f yur business-related mileage ver the year We will use the IRS s standard mileage rates f 53.5 cents per mile fr 2017 fr yur deductin f business-related travel. This rate accunts fr gas, repairs, maintenance, depreciatin, and aut insurance (but nt interest n a car lan). If yu d nt have a recrd f mileage r are unsure hw t calculate yur ttal, cntact the Business CENTS prgram ( ) fr help befre submitting yur tax materials fr VITA filing. D yu (r yur spuse) have anther vehicle available fr persnal use? YES NO miles driven fr business Jan-Dec ttal miles cmmuting ttal miles ther travel vehicle put int use fr business (date) Was yur vehicle available fr use during ff-duty hurs? YES NO Depreciatin We can nly file tax returns fr businesses with simple depreciatin: If yu put new depreciable business assets int service in 2017, they must be f a very simple depreciatin type. If yu have business assets already partially depreciated, yu must be able t prvide a depreciatin schedule frm a prir tax return. Date placed Itemize new assets t be depreciated Cst in service Filing tax returns with cmplicated depreciatin is beynd the scpe f the VITA prgram; yu will need t seek assistance frm an accuntant. Depreciable assets? Prev. year New 3

4 Insurance, including: Liability insurance Prperty insurance fr business assets (equipment, inventry, etc.) Business interruptin insurance Fire / fld insurance n business prperty Any rider n hmewner s insurance t cver business uses f yur hme NOTE: if yu pay fr persnal health insurance, it may be deductible. Please itemize this separately frm ther business-related insurance expenses. Ttal Persnal Health Insurance: Nn-Health Insurance Interest Yu may deduct interest paid n business lans, ther lans fr business prperty, and credit cards r lines f credit that are used slely fr business expenses. If yu wn yur hme and use it as yur principal place f business, yu may be able t deduct yur mrtgage interest, hwever d nt include that here. See Business Use f Hme abve. Yu may nt deduct the principal prtin f any lan payments, r the entire lan payment amunt. Mst lenders r creditrs will send yu an annual statement indicating hw much interest was paid in 2017; if yu are unsure hw t determine this, cntact yur lender / creditr. Interest Legal and prfessinal services, including Bkkeeping services Payrll services Accuntant fees (including tax preparatin fees) Legal fees NOTE: Yu generally cannt deduct legal fees paid in the prcess f acquiring business assets (e.g., purchasing a building). Legal and prfessinal Office expenses, including: Paper gds and statinery General ffice supplies Phtcpying, printing, and ffice-related services Pstage, shipping, billing, and ther general administrative csts NOTE: D NOT include the purchase r printing f business cards r ther marketing materials that were included in Advertising expenses abve. Office expense Rent r lease f prperty and/r equipment, including: Office r retail space Prductin r wrkshp space Strage space fr inventry r equipment Vehicle(s) fr business use Business equipment NOTE: If yu rent yur hme and use part f it as yur place f business, yu may be able t deduct a prtin f yur rent. This will nt be included here but will fall under Part 3 Business Use f Rent/lease 4

5 Repairs and maintenance, n wned, rented, r leased business prperty and/r equipment NOTE: D NOT cunt repair/maintenance expenses fr vehicles whse use was included in the sectin fr car and truck expenses abve. Ttal Repairs Supplies, including small gds r items used fr general peratinal needs f the business NOTE: materials, ingredients, parts, r cmpnents f yur prduct(s), r supplies that are exclusively used fr prductin f yur prduct(s), shuld nt be included here. These are included in Cst f Gds Sld, as explained abve in the Incme sectin. Be sure yu d nt cunt any f these expenses twice. Supplies Taxes and licenses, including: Fees fr permits r licenses that are rdinary and necessary fr yur line f business Prperty / real estate taxes n prperty yu wn that is used fr business purpses, nt including yur hme. Real estate taxes n yur hme shuld g under Business Use f Hme, abve. NOTE: D nt include sales tax here. If yu paid sales tax n gds and services yu purchased fr yur business, this shuld be included with the cst f thse gds and services in the relevant expense categries. Sales tax paid t New Yrk State that was cllected n gds and services yu sld is nt a business expense. And is als nt cunted as grss incme. Taxes/licenses Travel, meals, and entertainment, fr the rdinary and necessary expenses f traveling away frm hme, when yu are required t be away substantially lnger than an rdinary day s wrk, including: Transprtatin (nt including car/truck expense, cvered abve) Baggage and shipping Ldging, including assciated tips Meals and entertainment, including assciated tips Other services such as telephnes and dry cleaning NOTE: In general, meals taken while n business travel are nly 50% deductible, and yu must be away frm hme vernight. Yu can nt claim meals when yu are away frm hme fr a usual wrkday Fr rules n allwable entertainment expenses, see IRS Publicatin 463, Travel, Entertainment, Gift, and Car Expenses. Travel (except meals) 50% OF Meals Utilities, fr services supplied slely t yur place f business, and NOT t yur hme, including: Gas Electricity Heat Telephne Internet/Cable Utilities 5

6 Other expenses (itemized) If yu have ther, legitimate business expenses that d nt appear t fit in any f the expense categries listed abve, yu may include them here. These expenses must be itemized (listed individually), unlike fr the categries abve. Other expenses Other expenses (itemized) Cst Yu may als find it helpful t review IRS Publicatin 334, Tax Guide fr Small Businesses. Part 2: Business Use f Hme Wrksheet If yu use a prtin f yur hme as yur principal place f business, yu may be able t deduct part f yur rent r mrtgage, as well as certain ther relevant hme expenses. In rder t claim these business expenses, the part f yur hme used fr business generally must be used exclusively and regularly fr business purpses. These purpses can include hme ffice, prductin/wrkshp space, strage, etc. Fr in-hme daycare prviders, the usage need nt be exclusive. 1. Part f yur hme used fr business Ttal area f hme (square feet): Area f hme used fr business purpses (square feet): Daycare prviders: Because yu can deduct hme business expenses even if yu dn t use an area exclusively, we need additinal infrmatin abut the perating hurs f yur business in rder t calculate yur percentage. Days pen per year Hurs per day 2. Applicable hme business expenses. Fr VITA, we use the IRS simplified methd which simply allws yu t claim an expense f $5 per square ft up t 300 square feet r $