Once you’ve decided that you need to use the full Form 1040 for your tax return this year, you may find that your 1040 requires attached Schedules to detail further your tax situation to the IRS. Here are some of the most common schedules that taxpayers may need to attach to their tax returns.
Schedule C reports Profit or Loss From Business, and is mainly for those run a business as a sole proprietorship (or as a single-member LLC). There are sections on the Schedule C tax form for business income, gross profit, business expenses and net profit/loss. You can also enter information on business inventory and car expenses, if applicable. For sole proprietors who meet certain requirements, such as having less than $5,000 in expenses and reporting a net profit, you may use the simpler Schedule C-EZ instead. Note that if you attach a Schedule C, you likely need a Schedule SE as well (see below).
Schedule SE for Self-Employment Tax calculates the amount owed by self-employed individuals. Similar to how employers match an employee’s payroll taxes, self-employed taxpayers must pay both amounts themselves, by completing a Schedule SE. If your net earnings from self-employment are greater than $400, then you should fill out an SE.
Schedule E reports “Supplemental Income and Loss”, usually for those who receive income from rental properties or for those who are partners/shareholders in an S corporation (be sure to use the Schedule K-1 you received when completing your Schedule E). Also be sure to report any net losses from business activity you partook in.
The Child Tax Credit, known as Schedule 8812, is for taxpayers who should receive more credits from qualifying dependent children ($1,000 per child) than they owe on their tax return. Taxpayers should be sure that their dependent child qualifies for this tax credit and that they meet a certain income threshold.
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