Last Updated : January 14, 2009
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Schedule C-EZ

Schedule CEZ

Net profit from business (Sole proprietorship)

Purpose of the form:
 The taxpayer may use this form instead of schedule C-EZ if :

  • The taxpayer had business expenses of $5000 or less.
  • The taxpayer uses the cash method of accounting.
  • The taxpayer did not have an inventory at any time during the year.
  • The taxpayer did not have a net loss from his business.
  • The taxpayer had only one business as a sole proprietor or statutory employee.
  • The taxpayer had no employees during the year.
  • The taxpayer is not required to file Form 4562, Depreciation during the year and Amortization, for this business.
  • The taxpayer does not deduct expenses for business use of his home.
  • The taxpayer does not have prior Year unallowed passive activity losses from this business.

NOTE: If the taxpayer and spouse jointly own and operate an unincorporated business and share in the profits and losses, they are partners in partnership, even though they do not enter into a formal agreement of partnership. In that case the taxpayer should not use Schedule C or Schedule C-EZ but needs to file Form 1065. But in certain cases where they jointly own the unincorporated business as community property under the community property laws of the state then they can file Schedule C or Schedule C-EZ. For more information refer Publication 541.

PART-I: General Information

Line A:
Enter on this line the description of business or professional activity that provided your principal source of income reported on line 1.

Line B:
This line represents the Business Code. Enter on this line the 6 digit code that identifies you principal business or professional activity

Line C:
Enter on this line the business name. If there is no separate business name, leave this field blank

Line D:
Enter on this line the business’s federal employer identification number. An EIN is considered necessary only if taxpayer has a qualified retirement plan or was required to file an employment, excise, estate, trust, or alcohol, tobacco, and firearms tax return.

Line E:
Enter on this line the business address if it is different from the taxpayer’s address entered on General Information Sheet.

PART-II: Figure Your Net Profit

Line 1:
Enter gross receipts from your trade or business. Include amounts you received in your trade or business that were properly shown on Forms 1099-MISC. If the total amounts that were reported in box 7 of Forms 1099-MISC are more than the total you are reporting on line 1, attach a statement explaining the difference.

Statutory Employee:
If taxpayer received a Form W-2 and the “Statutory employee” box in box 13 of that form was checked, report income and expenses related to that income on Schedule C or C-EZ.

The program transfers the amount from Form W-2 on this line, if “Statutory employee” box on line 13 of that form is checked. However it is required to indicate at the bottom of Form W-2, the number of Schedule C-EZ to which this income required to be transferred.

“Statutory Employees include full-time life insurance agents, certain agent or commission drivers and travelling sales persons, and certain Home workers.

Line 2:

  • Enter the total amount of all deductible business expenses you actually paid during the year with their description and amount attributable to it in the table provided.
  • If the total amount of expense reported on line 2 is more than $5000 , then you must use Schedule C.
  • If you claim car or truck or other vehicle expenses, first complete PART-3 to figure the allowable expenses on the basis of standard Mileage Rate.
  • If the taxpayer is claiming depreciation or expenses for business use of home , you must file schedule C instead of Schedule C-EZ.
  • Examples of deductible expenses include advertising, car and truck expenses, commissions and fees, insurance, interest, legal and professional services, office expenses, rent or lease expenses, repairs and maintenance, supplies, taxes, travel, the allowable percentage of business meals and entertainment and utilities (including telephone).Refer publication 535, Business expenses.

Line 3:
On this line the package subtracts line 2 from line 1. If the net profit is less than zero, you must use schedule C.

 

PART-III: Information on Your vehicle

Complete Part-3 only if you are claiming vehicle expenses on line 2.

Line 5a and line 5b:
Enter the total number of business miles, commuting miles, and other miles driven during the tax year 2006. For definition of commuting miles refer instructions of Schedule C-EZ.

Line 6, line 7 and line 8:
If you are claiming vehicle expenses on line 2, you must answer the questions on lines 6, 7 and 8.

Supported States

Supported States

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IL MD MI NC NM NJ
NY OH PA SC VT
     

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