Schedule C Question... This Should Apply to A lot of People Here

I've used TurboTax for years. The step by step interview is pretty good at helping you determine what your expenses/deductions are. Sometimes that costs/costs of goods sold stuff has to do with those who are carrying an inventory, and/or who have to collect state sales tax, etc.

Even if you're making money through Clickbank, you may have expenses (hosting? domain? etc) that would be deducted against your earnings. So it's not so simple as just reporting your income, since there are expenses involved in running a business - and qualified expenses can be deducted from your income, thus reducing your net income.

There's also the 'home office deduction' which can be a bit cumbersome.

And these are just a few of the many considerations to be taken into account.

Bottom line is that even though TurboTax (TT) has lots of context-help integrated into the program - if you're really not sure of something, your best bet is to consult with a tax professional. Once you get some professional guidance during this first year of using TT, it will be easier for you in future years.

In any case, don't rely on getting the answers to your tax questions in this forum - unless we are ourselves tax professionals, we're not qualified to offer you guidance.

- Kat

You might very well qualify for the Schedule C-EZ, which is a streamlined, less detailed version of the Schedule C. If you:

* Have business expenses of $5,000 or less.
* Use the cash method of accounting.
* Do not have inventory at any time during the year.
* Never hire an employee.
* Do not depreciate any business property.
* Do not claim expenses for business use of your home.
* Do not carry over passive activity losses from an earlier tax year.

*Above list is from Schedule C vs. C-EZ

You can probably file a Schedule C-EZ. And even if you file a Schedule C, just enter 0 for goods/cost of goods sold (unless you actually do work with inventory).

DISCLAIMER: I AM NOT AN ACCOUNTANT. I strongly urge you to seek the advice of an accountant, particularly if this will be your first time declaring self-employment income. Or at least get advice from a good forum where accountants/tax preparers hang out. misc.taxes.moderated is a good one.

Actually, a Schedule C is not for people who work at home... it is for sole proprietors and that can include brick and mortar business too.

Basically, you show your income in the income section and you list your expenses in the expense section. You can show your income all under one account, i.e., Sales. You list your expenses by where you spent your money, i.e. office supplies, sub contractors, computer expense, professional fees, etc.

If you have expensive equipment, you may have to depreciate it instead of taking the full deduction. There is also something called Section 179 depreciation that allows you to take the full deduction in the first year.

I have oversimplified the whole process but there are a lot of laws regarding income and expenses and taxes. It would take a major product to even begin to explain how it all works.

Avenuegirl is right in that it can get pretty "goofy" for most people! It can cost you more in the long run if you don't get it right the first time so you need to talk to someone who has experience in that field.

Take care!

You need to consult an accountant.

Among other things, you'll need to decide whether you're going to use the cash or accrual method of accounting for your business and how you'll categorize your expenses. What you decide this time will affect your future returns... and your chances of an audit.

So do yourself a favor and get an accountant. It shouldn't cost much for a simple Schedule C.

Did you use pay per click? Did you buy ebooks or reports that taught you how to market the products? Did you pay any PayPal, eBay, bank or other fees associated with your business? How about the Turbo Tax program? There are a lot of possible expenses you may be overlooking!

Take care!

I'll tell you exactly what I do in step-by-step fashion:

1) I put all my tax info into folders.
2) I take those folders to my car.
3) I drive to my accountants office.
4) I leave them with my accountant.
5) As if by magic, my taxes are done in a few days.

There you go!

On a practical note, it really helps to have a separate bank account, credit card etc that you use for business and nothing else. Makes it easier to collect your business income, expenses etc. in order to fill in the forms, or for your accountant.