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Step 3: Schedule C
Schedule C is used to report income and expenses if you are self-employed, freelance, consulting, contracting, or operating a small business.
Step 3 of 8
Quick access:
Schedule C |
Schedule SE |
Form 2555 |
Schedule 1 |
Form 1040
Prefer to review the official IRS page first?
View Schedule C information on IRS.gov →
Do You Need Schedule C?
Schedule C may apply if you earn income from self-employment or business activity.
- You are self-employed or freelance
- You earn income outside of a regular employer relationship
- You run a consulting business, online business, or side business
- You are an independent contractor
- You operate a single-member LLC taxed as a sole proprietorship
Download Schedule C
Download Schedule C from the IRS
Tip: Open or print the form so you can complete it while following this guide.
Where This Fits in Your Tax Flow
Schedule C comes early in the self-employment filing process. You generally need to calculate your business profit before:
- Calculating self-employment tax on Schedule SE
- Understanding how business profit flows into Form 1040
- Comparing FEIE and FTC treatment for foreign earned income
- Completing later forms that depend on your business profit
View the current-year filing sequence →
What You’ll Calculate Here
- Total business income
- Total business expenses
- Net profit or loss
Your net profit is one of the most important numbers in the self-employed expat filing process.
What to Do Next
Once you have your net profit, move to Schedule SE to understand whether self-employment tax applies.
Key Concept
Net Profit = Business Income – Business Expenses. This is one of the most important numbers in your return.
How Schedule C Works
Business Income – Business Expenses = Net Profit or Loss
Complete Schedule C: Key Lines
Line 1 — Gross Receipts or Sales
- What the IRS is asking: Enter your total business income.
- What this means: All money earned before expenses.
- Where to find it: Invoices, bank deposits, payment platforms, 1099 forms, or business records.
- How to calculate: Add all business income received or earned according to your accounting method.
- Why this matters: This is the starting point of your business tax calculation.
Line 28 — Total Expenses
- What the IRS is asking: Add all deductible business expenses.
- What this means: The cost of running your business.
- Where to find it: Receipts, bank records, bookkeeping records, invoices, and payment processor statements.
- How to calculate: Sum all ordinary and necessary business expense categories.
- Why this matters: Business expenses reduce net profit.
Line 31 — Net Profit or Loss
- What the IRS is asking: Subtract expenses from income.
- How to calculate: Business income minus business expenses.
- Example: $100,000 income – $30,000 expenses = $70,000 net profit.
- Why this matters: This number generally flows into Schedule SE and Form 1040.
FEIE Does Not Usually Remove Self-Employment Tax
If you are self-employed abroad, Schedule C net profit may still flow into Schedule SE even if you also use Form 2555 for the Foreign Earned Income Exclusion.
This is one of the biggest surprises for self-employed expats. FEIE may reduce regular income tax, but it does not usually eliminate self-employment tax.
Continue to Schedule SE →
Detailed Walkthroughs & Examples
Need more guidance? Premium walkthroughs may include:
- Completed example forms
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- Common filing mistakes
- Real expat filing scenarios
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Next Step: Calculate Self-Employment Tax
After Schedule C calculates your net business profit, Schedule SE determines whether self-employment tax applies.
Continue to Schedule SE →
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Next: Schedule SE →