Tax Term of the Week

Schedule C [Profit and Loss from Business]- When a taxpayer has an unincorporated business and is a sole proprietor business owner, they are required to file taxes on Schedule C attached to their IRS Form 1040. Schedule C allows taxpayers to deduct the expenses incurred during the tax year from the gross income received. Schedule C taxpayers are required to pay half of their Self-Employment tax since they work for themselves. Any debt incurred by a sole proprietor will be recorded as a 1040 liability under the taxpayer's SSN and can be found on their IMF (Individual Master File). Taxpayers need to be able to prove the figures listed on the 1040, Schedule C.