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Schedule C Expenses

Deductible Schedule C expenses

Schedule C expenses are found in Part II and Part V of Schedule C. Most expenses you incur for your business are tax deductible. Deductible business expenses must be their ordinary or necessary.

What are ordinary expenses?

Ordinary expenses are those that are common and accepted in your type of business.

What are necessary expenses?

Necessary expense are those that are appropriate and helpful to your business.

Car and truck expenses

Cars and truck expenses (line 9) are costs you pay to operate a business vehicle. If you enter an amount on line 9 of Part II, be sure to enter the information required about your vehicle in part IV of Schedule C (if using the standard mileage rate) or on page 2 of Form 4562 (if using actual expenses). Car and truck expenses include the cost of gas, oil, repairs, insurance, depreciation and license tags.

To take the standard mileage rate, multiply the number of business miles driven by 44.5 cents (for 2006). In addition to the standard mileage rate and actual expenses you can deduct parking fees and tolls, the business percentage of interest paid on a vehicle loan (line 16) and the business percentage of the personal property taxes paid on the vehicle (line 23).


Commissions and fees

Deduct Commissions and fees (line 10) other than amounts paid for contract labor.


Contract Labor

Amounts paid to independent contractors or contract labor is entered on line 11. If you paid an independent contractor $600 or more, you must send them a Form 1099- MISC. Do not include on this line the salaries and wages paid to your employees, instead see line 26.

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