Navigating Form 1040 Schedule C ON DEMAND

Overview

There is little doubt in the minds of many observers that the world of work-an environment in which a legion of wage earners commutes to an employer’s office or worksite to toil from 9 to 5-is changing, and that impression is bolstered by recent studies. Among those studies is a Gallup report titled “The Gig Economy and Alternative Work Arrangements.” The changing nature of work for many taxpayers is likely to have an effect on tax preparers’ need to prepare Schedule C. Whether the strength of the gig economy is due to the flexibility and freedom it affords, the fewer limits on income it exerts compared to being a wage earner or results from some other advantage it offers, it seems clear that, barring a cataclysmic event affecting the economy, the gig economy is here to stay and intent on growing larger with each year. With that growth is the likely growth of tax preparers’ need to be familiar with preparation of Schedule C.

Highlights

When is a taxpayer considered Self-Employed. Business Expenses. Business use of a home. Recordkeeping requirements. Schedule C profit or loss from business.

Prerequisites

None.

Designed For

CPAs.

Objectives

Identify the factors included in the common law test used to determine a taxpayer’s status as self-employed. Recognize what constitutes business income. List the categories of taxpayers generally identified as “statutory employees. “ Describe the tax treatment of installment sales whose gain is recognized under the installment method. Identify the role of the applicable federal rates (AFRs) in connection with the installment method. Identify the requirements that business expenses must meet to be deductible. Recognize the insurance expenses that a Schedule C taxpayer may deduct. Describe the difference between a business and a hobby. List the taxes and licenses that are deductible on Schedule C. Distinguish between the actual expense method and simplified method of figuring the home-office deduction. List the expenses normally deductible by taxpayers using a home for business purposes who use the actual expense method. Recognize the limits applicable to a home-office deduction.

Preparation

None.

Notice

None.