How to fill out Schedule C as a freelancer

Who files Schedule C?

Schedule C, Profit or Loss From Business, is the form a sole proprietor attaches to Form 1040. If you freelance or work as a 1099 contractor and have not set up a corporation or partnership, this is almost certainly your form. That includes a single-member LLC, which the IRS generally disregards for income tax unless it elected corporate treatment.

An activity is a business when your main purpose is profit and you work at it with continuity and regularity; a hobby is reported differently. Spouses who run a business together are generally partners and file Form 1065 instead, unless they qualify for and elect qualified joint venture status, in which case each spouse files their own Schedule C, or they own the business as community property and treat it as a sole proprietorship.

Which year's form? Your 2026 income goes on the 2026 Schedule C, filed in 2027. As of this writing, the IRS has posted an early release draft of the 2026 form but not the final form or its 2026 instructions. The line numbers below follow the 2026 draft, which matches the 2025 form except that interest is split into three lines (mortgage, vehicle loan, other). Check the final form before you file.

The top of the form

• Line A and B: describe your business and enter the six-digit activity code from the list at the end of the instructions.
• Line D: your EIN, only if you have one. Leave it blank otherwise. Never enter your SSN here.
• Line F: accounting method. Most freelancers use cash: income counts when you receive it, and expenses when you pay them.
• Line G: material participation. If you do the work yourself, this is normally "Yes."
• Lines I and J: whether you made payments that require you to file Forms 1099, and whether you did. For payments made after 2025, the Form 1099-NEC threshold for paying a contractor is $2,000.

Part I: income

Line 1, gross receipts, is every dollar your business took in during the year. The instructions specifically mention amounts reported on Forms 1099-NEC, 1099-MISC, and 1099-K, but the form does not limit income to what was reported. Direct bank transfers, checks, and cash from clients all belong here. A client is not required to send a 1099-NEC unless they paid you $2,000 or more in 2026, and a payment app or marketplace generally issues a 1099-K only when payments pass $20,000 and 200 transactions. Below those lines you still report the income.

If your Forms 1099-NEC add up to more than line 1, attach a statement explaining the difference. And don't count the same payment twice: a client who paid you through a payment platform may show up on that platform's 1099-K rather than on a 1099-NEC. The 1099-NEC vs 1099-K guide covers how the two forms overlap.

Line 2 is refunds and allowances you gave customers. Line 4, cost of goods sold,comes from Part III, which is for businesses that make or sell products and keep inventory. A designer, writer, developer, or consultant who sells services usually leaves Part III blank and enters zero. Line 6 is other business income, such as a business-related prize or a recovered bad debt. Line 7 is your gross income.

Part II: expenses

Deductible expenses must be ordinary and necessary for your business. Personal costs don't qualify, and the business part of a mixed-use item is all you can deduct. These are the lines most freelancers use:

• Line 8, advertising: ads, a portfolio site's promotion, printed marketing.
• Line 9, car and truck: business driving at the standard mileage rate or actual costs, plus business parking and tolls. Commuting is not deductible. See the business mileage guide.
• Line 10, commissions and fees: for example, the service fees a freelance marketplace keeps from each payment.
• Line 11, contract labor: subcontractors you pay, not employees.
• Line 13, depreciation and section 179: equipment such as a computer whose usefulness lasts substantially beyond the year. Property placed in service this year requires Form 4562.
• Line 15, insurance (other than health): professional liability or business property coverage. Your own health insurance is not deducted here; see the self-employed health insurance guide.
• Line 17, legal and professional services: accountant, attorney, and business tax preparation fees.
• Line 18, office expense: office supplies and postage.
• Line 19, pension and profit-sharing: only contributions for employees. Contributions for yourself go on Schedule 1, not Schedule C. The SEP IRA vs Solo 401(k) guide explains the options.
• Line 20b, rent: a coworking desk or office outside your home.
• Line 22, supplies: materials and small tools you use up during the year.
• Line 23, taxes and licenses: business licenses and regulatory fees. Federal income tax and self-employment tax are not deductible here.
• Line 24a, travel: lodging and transportation for overnight business trips away from your tax home.
• Line 24b, deductible meals: in most cases 50% of qualifying business meal costs. Entertainment is not deductible.
• Line 25, utilities: business-only utilities. The base rate of the first phone line into your home is not deductible, but a second business line is.

Part V, other expenses (line 48, carried to line 27b), is for anything ordinary and necessary that doesn't fit a named line. You list each item and amount. Common freelancer entries are software subscriptions, professional dues, and business education. The instructions note that software you must capitalize goes through depreciation instead. Part V can't include equipment purchases, personal expenses, charitable gifts, or government fines.

Line 28 totals lines 8 through 27b, and line 29 is your tentative profit.

Line 30: home office

Home office costs go only on line 30, never on the other expense lines. You choose one of two methods each year:

• Simplified method: $5 per square foot of qualifying space, up to 300 square feet, so a maximum of $1,500. You enter your home's total square footage and the business square footage on line 30 and use the worksheet in the instructions. No Form 8829 and no home depreciation.
• Regular method: the business share of actual costs such as rent or mortgage interest, utilities, insurance, and depreciation, figured on Form 8829 and attached to your return.

Either way, the space must meet the regular and exclusive use tests, and the deduction can't exceed the income from the business use of your home. The home office deduction guide walks through both methods.

Line 31: net profit and where it goes

Line 31 is line 29 minus line 30. If it is a profit, you enter it in two places:

1. Schedule 1 (Form 1040), line 3, where it joins your other income for income tax.
2. Schedule SE, line 2, where it becomes the base for self-employment tax. You then deduct half of that tax on Schedule 1.

Net profit is also the starting point for the qualified business income deduction. If line 31 is a loss, you go to line 32 to answer the at-risk question, and other loss limits may apply.

Part IV: vehicle information

If you claim car or truck expenses on line 9 and don't have to file Form 4562 for this business, you answer Part IV: the date the vehicle was placed in service, business, commuting, and other miles for the year, whether it was available for personal use, and whether you have written evidence. If you depreciate the vehicle, you report this on Form 4562 instead.

Worked example: an $85,000 design business

A freelance designer received $62,000 reported on Forms 1099-NEC, $18,500 through a payment platform, and $4,500 by direct bank transfer from clients who sent no form. They drove 1,200 business miles in January through June and 1,800 from July through December. The 2026 standard mileage rate is 72.5 cents per mile for the first half and 76 cents from July 1. They use the simplified method for a 200-square-foot office. All figures are illustrative.

The $70,282 goes to Schedule 1, line 3, and Schedule SE, line 2. Because the designer paid one subcontractor $3,000, more than the $2,000 threshold, they would answer "Yes" on line I and would need to file a Form 1099-NEC for that contractor. To see the self-employment tax on a profit like this, enter it in the self-employment tax calculator.

Recordkeeping

The IRS lets you use any recordkeeping system that clearly shows income and expenses. For most small businesses the business bank account is the main source. Keep the documents behind every number: invoices and deposit records for income, and receipts, paid bills, and proof of payment for expenses, each showing the payee, amount, date, and what was bought. Car, travel, and gift expenses have stricter substantiation rules, so keep a mileage log as you go. In general, keep records for 3 years after filing, longer in some cases, such as 6 years if you leave out more than 25% of your gross income or 7 years for a bad debt deduction.

The freelancer tax checklist lists the documents to gather.

Plan for the tax during the year

The tax on your net profit is due as you earn it, not just at filing time. Use the quarterly estimated tax calculator to split it into four payments, and the freelance rate calculator to check that your prices cover taxes. For decisions about your own return, a tax professional can review your situation.