You may use Schedule C-EZ instead of Schedule C if you:
- Had business expenses of $5,000 or less.
- Use the cash method of accounting. (See “Cash Basis” post).
- Did not have an inventory at any time during the year.
- Did not have a net loss from your business.
- Had only one business as either a sole proprietor, qualified joint venture, or statutory employee.
- Had no employees during the year.
- Are not required to file Form 4562, Depreciation and Amortization, for this business. (See the instructions for Schedule C, line 13, to see if you meet this test).
- Did not deduct expenses for business use of your home (home office deduction).
In Schedule C-EZ, Part II, line 2, you report all your expenses for the year on this one line and they must total $5,000 or less. There is a short worksheet at the bottom of page 2 to summarize your expenses which you keep for your records. You must maintain your records and documents to support these deductions for at least 3 years from the due date of your return.
If you are claiming car or truck expenses on line 2, you must answer the questions in Schedule C-EZ, Part III.
Questions F and G on Schedule C-EZ ask whether you made payments that would require you to file Form 1099 and, if required, whether you filed them or not. Read my “Form 1099” post for more information on this topic.