If you’re self employed, you have a few more federal income tax forms to fill out than if you worked for a company. Not only do you need the usual 1040 series of tax forms, you also need to pick up Schedule C or the Schedule C-EZ. These federal income tax forms are just for those who are self employed.
Difference Between C and C-EZ
The differences between the Schedule C and the Schedule C-EZ tax forms is much like the 1040 and federal income tax forms 1040EZ. One is the much simpler version of the other. However, there are certain restrictions on the easier version so not everyone can use it.
- Business expenses were less than $5,000
- Used cash method of accounting
- Had no inventory any time of the year
- Had no net loss from your business
- Had only one business
- No employees during the year
- Do not deduct expenses for business use of your home
- Do not have prior year unallowed passive activity losses from this business
If you fit in all these categories, you can use the Schedule C-EZ. It’s much simpler to fill out and takes less time. If not, you must use the Schedule C federal income tax forms.
Also, you must pick up one of the 1040 federal income tax forms to complete your personal taxes.
There are three main versions of the 1040 tax forms. The 1040, the 1040A, and the tax forms 1040EZ. Like the Schedule C-EZ, the federal income tax forms 1040EZ is the simplest version of the 1040. Also like it, there are a few restrictions.
- Annual income is over $8,450 if single or $16,900 if married
- No dependents
- No adjustments
- Can only claim Earned Income Credit (EIC)
If you don’t fit in those categories, you must use either the 1040A or the 1040. If you’re itemizing your deductions at all, you must use the 1040.