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When I put in income is that what the business earned in the year or my wages for the year ?

 
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Vanessa A
Employee Tax Expert

When I put in income is that what the business earned in the year or my wages for the year ?

It depends on where you are seeing this?

 

If you are a sole proprietor, when you enter your income you will enter the total amount of money the business took in for the year.  After you do that, you will continue through and enter your expenses.  This will all be reported on Schedule C.  Your income will be the income the business took in minus the expenses.  If you are taking money out of the business to pay yourself, that is not what is considered your wages.  As a self-employed person, unless you are an S-Corp or an LLC that chose to be treated as an S-Corp, you do not have wages in the same sense that you would as an employee.  Your wages are the profit regardless of if you spend it or leave it in the bank to be re-invested. 

 To enter your self-employment income select the following:

  1. Federal
  2. Income and Expenses
  3. Show More next to Self-Employment
  4. Start next to Self-Employment
  5. Yes, to you have any self-employment income or expenses
  6. Enter the type of self-employment work you do and you can select that you use your name for your business
  7. Click through a few more screens and you will get to a screen that says "Your XX info"
  8. Click Looks good
  9. Then you will come to a screen that says Let's enter the income for your business.  It will give you the option of 1099-NEC or Other self-employed income including the 1099K , cash and checks.  Here is where you will enter your 1099
  10. If you do not select one, it will not let you enter your income
  11. Enter your self-employment income on the next screen
  12. Continue and on the next screen click add expenses

* Please note navigation may differ slightly depending on which version of TurboTax you are using*

This also means you will be subject to SE Tax.  If you did not pay SE Taxes in 2024, and if you plan to do this again in 2025, it may be a good idea to make  quarterly estimated payments to cover your SE taxes of 15.3% and avoid penalties.

What Is a Schedule C IRS form?

If you are being treated as an S-Corp, then you would need to use TurboTax Business (NOT home and Business) to file an 1120S, on here you would enter your total income and expenses for the business and then issue yourself a W-2 for your wages.

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