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Level 2
posted Mar 5, 2025 9:32:32 AM

Self Employment

The Self Employment section on TurboTax asks if I spent money on certain things like renting a building, advertising or paying employees. If I already subtracted those amounts to find my net income, can I still use those as deductions? 

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6 Replies
Employee Tax Expert
Mar 5, 2025 9:40:46 AM

No, for tax reporting on the Schedule C, you must enter gross income and categorize deductions.  TurboTax then calculates the net business income.  

Expert Alumni
Mar 5, 2025 9:49:30 AM

Do not report the net of income and expenses.

 

When reporting self-employment income and expenses, the gross income and gross expenses are reported.

 

Gross income is reported under Part I of Schedule C.

 

Gross expenses are reported under Part II of Schedule C.

 

Net profit or loss is reported on line 31.

 

 

 

 

 

 

Level 15
Mar 5, 2025 9:52:15 AM

No  you can't do it that way.  So start over and delete the net income  you entered.  I would delete that schedule C business and start over.   You need to enter Gross amounts.  Turbo Tax will fill out schedule C and figure your Net Profit or Loss.  

 

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You can enter Self Employment Income into Online Deluxe but if you have any expenses you will have to upgrade to Premium version. Or any of the Desktop programs. But you will get the most help in the Home & Business version.


How to enter income from Self Employment
https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/26653


Where to enter business expenses
https://ttlc.intuit.com/community/entering-importing/help/where-do-i-enter-my-self-employment-business-expenses-like-home-office-vehicle-mileage-and-supplies/01/27109

Expert Alumni
Mar 5, 2025 10:01:17 AM

No, as the previous answers have stated, you need to claim your income first, next claim your expenses.

 

Also enter your assets, things you bought to use for the business, such as equipment and perhaps a business vehicle. Those things will be depreciated (you can't "not depreciate" assets) and that matters yearly, since depreciation lowers your profit, and also when you sell that business asset. 

 

The IRS wants a trail for the income. It one Taxpayer claims a payment they made to you as an expense, the IRS will want to see that amount claimed as income by you. (You don't enter all payments separately unless they are reported on a tax form to you, such as a 1099-NEC) 

 

Depending on the type of business, not having separate expenses listed can be a red flag to the IRS.

 

Level 15
Mar 5, 2025 10:05:52 AM

And some expenses might be limited in how much you can take or you have to depreciate it over time and not take the full amount at once.   And you have to put the expenses on the right line.

 

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center


IRS guide to business expense resources
https://www.irs.gov/forms-pubs/guide-to-business-expense-resources


Publication 334, Tax Guide for Small Business
https://www.irs.gov/pub/irs-pdf/p334.pdf


1040 Schedule C
https://www.irs.gov/pub/irs-pdf/f1040sc.pdf


1040 Schedule C Instructions
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

 

Expert Alumni
Mar 5, 2025 10:29:55 AM