BUS FPX 4065 Assessment 2 Self-Employed Business Income-Schedule C

Student Name

Capella University

BUS-FPX4065 Income Tax Concepts and Strategies

Prof. Name

Date

Completing IRS Schedule C: A Comprehensive Overview

To accurately calculate the profit or loss from a business on IRS Schedule C, it is essential to complete several additional forms. While many business expenses are straightforward, some may not be explicitly listed on Schedule C and require entry into Part V under “other expenses,” accompanied by a description.

Furthermore, besides business expenses eligible for tax purposes, one must consider home office deductions. For example, individuals like Jacob, who operate businesses from their homes, must decide between using the simplified method or completing Form 8829 for Expenses for Business Use of Your Home. The simplified method entails multiplying the square footage of the business space by the standard rate per square foot. In Jacob’s scenario, with 240 square feet utilized for business, this equated to a $1,200 deduction. Conversely, using Form 8829 yielded a deduction of $1,096. Jacob opted for the simplified method, thereby reducing his net profits.

BUS FPX 4065 Assessment 2 Self-Employed Business Income-Schedule C

After accounting for such deductions, Jacob’s net profit from his business totaled $168,000, derived from original gross receipts or sales of $278,322, minus business expenses and the home office deduction.

Ensuring accuracy in Schedule C entails additional calculations, particularly when computing self-employment tax using Schedule SE. These computations involve multiplying the net profit by 92.35%, determining wages subject to social security tax, and then applying the applicable tax rates. The resultant self-employment tax is then divided and recorded on Schedule 1.

Given the intricate nature of tax filings, completion of multiple forms is necessary, including Schedule C, Schedule 1, Schedule 8812, Schedule A & B, Schedule 3, along with Forms 2441, 8812, and 8995.

References

Internal Revenue Service. (n.d.). Schedule C (Form 1040). Retrieved from https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

BUS FPX 4065 Assessment 2 Self-Employed Business Income-Schedule C