What Schedule C is
Schedule C, “Profit or Loss From Business”, is the form sole proprietors use to report what their business earned and spent. If you work as a freelancer, independent contractor or gig driver without forming a corporation, this is where your 1099 income goes. Its result, your net profit, flows into your Form 1040 and into self-employment tax.
Line numbers below follow the most recent Schedule C. The IRS sometimes renumbers lines (for example, “other expenses” moved to line 27b), so check the form for your tax year.
The questions at the top
- Line A, principal business: a short description, such as “food delivery” or “graphic design”.
- Line B, business code: a six-digit code from the instructions. Two common ones: 492000 (couriers and messengers, for delivery apps) and 485300 (taxi, limousine and ridesharing service).
- Line F, accounting method: most freelancers and drivers use cash, meaning you count income when you receive it and expenses when you pay them.
- Line G, material participation: “yes” if you do the work yourself.
- Lines I and J: whether you paid anyone in a way that requires you to send them a 1099. For most solo workers the answer is no.
Part I: Income
Line 1, gross receipts, is the total you were paid: every 1099-NEC and 1099-K, plus payments that did not come with a form (cash, small clients). If a 1099-K includes fees the platform kept, report the gross amount here and deduct the fees in Part II.
If you sell products, lines 2 through 5 handle returns and cost of goods sold. Pure service businesses usually leave them blank, so line 7, gross income, equals line 1.
Part II: Expenses (the lines 1099 workers use most)
| Line | What goes there |
|---|---|
| 9, Car and truck expenses | Your mileage deduction (72.5¢ per mile January–June and 76¢ July–December in 2026) or actual car costs, plus parking and tolls. |
| 10, Commissions and fees | Fees apps and platforms kept from your gross earnings, payment-processing fees. |
| 18, Office expense | Small office items and postage. |
| 22, Supplies | Insulated bags, tools, materials you use up in the work. |
| 24b, Meals | Business meals are generally only 50% deductible. Meals while simply working your normal day are not business meals. |
| 25, Utilities | For most home-based workers, only the business share of costs such as a separate business phone line. |
| 27b, Other expenses | Anything that fits no other line, listed item by item in Part V: for example, the business share of your phone plan, software subscriptions, or a mileage-tracking app. |
Line 28 adds them up. Only include costs that are ordinary and necessary for your work, and keep receipts.
Line 30: Home office
If you use part of your home regularly and exclusively for your business, you can deduct it here. The easiest way is the simplified method: $5 per square foot, up to 300 square feet, so at most $1,500. The alternative is Form 8829, based on your actual home costs. A kitchen table you also eat at does not qualify.
Line 31: Net profit
Line 31 is gross income minus all expenses. That number:
- goes to Schedule 1 of your Form 1040 as business income, and
- goes to Schedule SE to figure your self-employment tax, half of which you deduct back on Schedule 1.
To see the whole chain, from line 1 to what you owe, use our 1099 tax calculator.
Part IV: Information on your vehicle
If you claim car expenses on line 9 and do not have to file Form 4562, answer the questions in Part IV: when you started using the vehicle for business, how many miles were business, commuting and other, and whether you have written evidence. Your mileage log is that evidence.
Before you file
- Collect your 1099s, but base line 1 on your own records.
- Total your miles, split by the two 2026 rate periods.
- Sort your receipts into the expense lines above.
- Decide on the home office method, if you qualify.
- Carry line 31 to Schedule 1 and Schedule SE.
New to all of this? Start with our beginner’s guide to 1099 taxes.