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                                                    i1040x
AH XSL/XML          Fileid: … form-1040)/2024/a/xml/cycle08/source                                      (Init. & Date) _______
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2024 Instructions for Schedule C
                                              Use Schedule C (Form 1040) to report income or (loss) from a business you operated 
Profit or Loss                                or a profession you practiced as a sole proprietor. An activity qualifies as a business if 
                                              your primary purpose for engaging in the activity is for income or profit and you are 
From Business                                 involved in the activity with continuity and regularity. For example, a sporadic activi-
                                              ty, a not-for-profit activity, or a hobby does not qualify as a business. To report income 
                                              from a nonbusiness activity, see the instructions for Schedule 1 (Form 1040), line 8j.
                                              Also, use Schedule C to report (a) wages and expenses you had as a statutory em-
                                              ployee; (b) income and deductions of certain qualified joint ventures; and (c) certain 
                                              amounts  shown  on  a  Form  1099,  such  as  Form  1099-MISC,  Form  1099-NEC,  and 
                                              Form  1099-K.  See  the  instructions  on  your  Form  1099  for  more  information  about 
                                              what to report on Schedule C.
                                              You may be subject to state and local taxes and other requirements such as business 
                                              licenses and fees. Check with your state and local governments for more information.

Section references are to the Internal        additional  information,  see  the  Instruc-  See Form 461 and its instructions for 
Revenue Code unless otherwise noted.          tions for Form 1040-SS.                       details on the excess business loss limi-
                                              Business  meals  deduction.  The  busi-       tation.
Future Developments                           ness meals deduction is 50%.                  Small  Business  and  Self-Employed 
For  the  latest  information  about  devel-  Reporting nontaxable Medicaid waiv-           (SB/SE) Tax Center.          Do you need help 
opments  related  to  Schedule  C  and  its   er  payments. Certain  Medicaid  waiver       with a tax issue or preparing your return, 
instructions,  such  as  legislation  enacted payments  that  are  reported  to  you  on    or  do  you  need  a  free  publication  or 
after they were published, go to IRS.gov/     Form  1099-MISC  or  Form  1099-NEC           form? SB/SE serves taxpayers who file 
ScheduleC.                                    may be nontaxable. For information on         Form 1040, 1040-SR, Schedules C, E, F, 
                                              how to report those payments on Sched-        or Form 2106, as well as small business 
What's New                                    ule  C,  see Medicaid  waiver  payments,      taxpayers with assets under $10 million. 
                                              later.                                        For  additional  information,  go  to  the 
Form 1040-SS filers and business use                                                        Small Business and Self-Employed Tax 
of home. For 2024, taxpayers who file         Gig  economy  tax  center. The  gig  (or 
                                                                                            Center at IRS.gov/SmallBiz.
Form 1040-SS and claim a deduction for        on-demand, sharing, or access) economy 
business use of home will report the ex-      refers  to  an  activity  where  people  earn 
pense on Schedule C (Form 1040). Fil-         income  providing  on-demand  work,           General 
ers  will  use  Form  8829,  Expenses  for    services, or goods. Go to IRS.gov/Gig to 
Business Use of Your Home, if applica-        get more information about the tax con-       Instructions
ble,  to  figure  the  deduction  and  report sequences  of  participating  in  the  gig    Other Schedules and Forms 
the amount on Schedule C, line 30.            economy.
                                                                                            You May Have To File
Standard  mileage  rate.   The  business      Excess business loss limitation. If you 
standard  mileage  rate  for  2024  is  67    report a loss on line 31 of your Sched-       • Schedule A (Form 1040) to deduct 
                                                                                            interest, taxes, and casualty losses not 
cents per mile.                               ule C (Form 1040), you may be subject 
                                                                                            related to your business.
                                              to a business loss limitation. The disal-
Bonus depreciation. The bonus depre-                                                        • Schedule E (Form 1040) to report 
                                              lowed loss resulting from the limitation 
ciation  deduction  under  section  168(k)                                                  rental real estate and royalty income or 
                                              will not be reflected on line 31 of your 
continues its phaseout in 2024 with a re-                                                   (loss) that is not subject to 
                                              Schedule  C.  Instead,  use  Form  461  to 
duction of the applicable limit from 80%                                                    self-employment tax.
                                              determine  the  amount  of  your  excess 
to 60%.                                                                                     • Schedule F (Form 1040) to report 
                                              business loss, which will be included as 
                                                                                            profit or (loss) from farming.
                                              income  on  Schedule  1  (Form  1040), 
Reminders                                     line  8p.  Any  disallowed  loss  resulting   • Schedule J (Form 1040) to figure 
                                                                                            your tax by averaging your farming or 
Redesigned  Form  1040-SS.       Sched-       from this limitation will be treated as a 
                                                                                            fishing income over the previous 3 
ule  C  (Form  1040)  is  available  to  be   net  operating  loss  that  must  be  carried 
                                                                                            years. Doing so may reduce your tax.
filed with Form 1040-SS, if applicable.       forward  and  deducted  in  a  subsequent 
It  replaces  Form  1040-SS,  Part  IV.  For  year.                                         • Schedule SE (Form 1040) to pay 
                                                                                            self-employment tax on income from 
                                                                                            any trade or business.
                                 Instructions for Schedule C (Form 1040) (2024)  Catalog Number 24329W
Dec 6, 2024                            Department of the Treasury  Internal Revenue Service  www.irs.gov

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• Form 461 to report an excess                Single-member LLCs with employees.            you may not have to file Form 1065 if 
business loss.                                A  single-member  LLC  must  file  em-        either of the following applies.
• Form 3800 to claim any of the               ployment  tax  returns  using  the  LLC's     • You  and  your  spouse  elect  to  be 
general business credits.                     name and employer identification num-         treated as a qualified joint venture. See 
• Form 4562 to claim depreciation             ber (EIN) rather than the owner's name        Qualified Joint Venture next.
and amortization on assets placed in          and EIN, even if the LLC is not treated       • You  and  your  spouse  wholly  own 
service in 2024, to claim amortization        as  a  separate  entity  for  federal  income the unincorporated business as commun-
that began in 2024, to make an election       tax purposes.                                 ity property and you treat the business as 
under section 179 to expense certain                                                        a  sole  proprietorship.  See Community 
                                              Heavy highway vehicle use tax.   If you 
property, or to report information on                                                       Income, later.
                                              use  certain  highway  trucks,  truck-trail-
listed property.                                                                            Otherwise, use Form 1065. See Pub. 541 
                                              ers,  tractor-trailers,  or  buses  in  your 
• Form 4684 to report a casualty or                                                         for information about partnerships.
                                              trade or business, you may have to pay a 
theft gain or (loss) involving property 
                                              federal  highway  motor  vehicle  use  tax. 
used in your trade or business or                                                           Qualified Joint Venture
                                              See  the  Instructions  for  Form  2290  to 
income-producing property.
                                              find out if you must pay this tax and go      You and your spouse can elect to treat an 
• Form 4797 to report sales, 
                                              to IRS.gov/Trucker  for  the  most  recent    unincorporated  business  as  a  qualified 
exchanges, and involuntary conversions 
                                              developments.                                 joint venture instead of a partnership if 
(not from a casualty or theft) of trade or 
business property.                            Information returns.   You may have to        you:
• Form 6198 to apply a limitation to          file  information  returns  for  wages  paid  • Each  materially  participate  in  the 
your loss if you have a business loss and     to  employees,  and  certain  payments  of    business (see Material participation, lat-
you have amounts invested in the              fees and other nonemployee compensa-          er, in the instructions for line G);
business for which you are not at risk.       tion, interest, rents, royalties, real estate • Are  the  only  owners  of  the  busi-
• Form 6252 to report income from             transactions,  annuities,  and  pensions.     ness; and
an installment agreement.                     See Line I, later, and IRS.gov/Form1099       • File a joint return for the tax year.
• Form 7205 to claim the IRC 179D             for details and other payments that may       Making the election will allow you to 
deduction for qualifying energy efficient     require you to file a Form 1099.              avoid the complexity of Form 1065, but 
commercial building expenses.                    If  you  received  cash  of  more  than    still give each of you credit for social se-
• Form 8582 to apply a limitation to          $10,000 in one or more related transac-       curity earnings on which retirement ben-
your loss from passive activities.            tions in your trade or business, you may      efits,  disability  benefits,  survivor  bene-
• Form 8594 to report certain                 have to file Form 8300. For details, see      fits,  and  insurance  (Medicare)  benefits 
purchases or sales of groups of assets        the Instructions for Form 8300 and Pub.       are  based.  In  most  cases,  this  election 
that constitute a trade or business.          1544. See also the IRS Form 8300 Ref-         will  not  increase  the  total  tax  owed  on 
• Form 8824 to report like-kind               erence  Guide,  available  at IRS.gov/        the joint return.
exchanges.                                    Businesses/Small-Businesses-Self-             Jointly owned property.      You and your 
• Form 8829 to claim actual                   Employed/IRS-Form-8300-Reference-             spouse must operate a business to make 
expenses for business use of your home.       Guide.                                        this  election.  Do  not  make  the  election 
• Form 8936 to claim the                                                                    for jointly owned property that is not a 
                                                 E-filing  Forms  1099. The  Taxpayer 
commercial clean vehicle credit.                                                            trade or business.
                                              First Act of 2019 authorized the Depart-
• Form 8960 to pay Net Investment                                                                   Only businesses that are owned 
                                              ment of the Treasury and the IRS to is-
                                              sue  regulations  that  reduce  the  250-re-
Income Tax on certain income from                                                           !       and  operated  by  spouses  as 
your passive activities.                                                                    CAUTION co-owners (and not in the name 
                                              turn e-file threshold. T.D. 9972, publish-
• Form 8990 to determine whether                                                            of a state law entity) qualify for the elec-
                                              ed February 23, 2023, lowered the e-file 
your business interest deduction is                                                         tion. Thus, a business owned and oper-
                                              threshold to 10 (calculated by aggregat-
limited.                                                                                    ated  by  spouses  through  an  LLC  does 
                                              ing all information returns), effective for 
• Form 8995 or 8995-A to claim a                                                            not qualify for the election of a qualified 
                                              information  returns  required  to  be  filed 
deduction for qualified business income.                                                    joint venture.
                                              after  2023.  Go  to IRS.gov/filing/e-file-
Single-member  limited  liability  com-       information-returns for e-file options.
pany (LLC).    Generally, a single-mem-                                                     Making  the  election.       To  make  this 
ber domestic LLC is not treated as a sep-     Business Owned and                            election,  divide  all  items  of  income, 
arate  entity  for  federal  income  tax      Operated by Spouses                           gain, loss, deduction, and credit attribut-
purposes. If you are the sole member of                                                     able  to  the  business  between  you  and 
                                              Generally, if you and your spouse jointly 
a  domestic  LLC,  file  Schedule  C  (or                                                   your spouse based on your respective in-
                                              own and operate an unincorporated busi-
Schedule  E  or  F,  if  applicable)  unless                                                terests in the business. Each of you must 
                                              ness and share in the profits and losses, 
you  have  elected  to  treat  the  domestic                                                file  a  separate  Schedule  C  or  F  (Form 
                                              you are partners in a partnership, wheth-
LLC  as  a  corporation.  See  Form  8832                                                   1040). Enter your share of the applicable 
                                              er or not you have a formal partnership 
for  details  on  making  this  election  and                                               income,  deduction,  or  (loss)  on  the  ap-
                                              agreement.  You  generally  have  to  file 
for  information  about  the  tax  treatment                                                propriate  lines  of  your  separate  Sched-
                                              Form  1065  instead  of  Schedule  C  for 
of a foreign LLC.                                                                           ule  C  or  F  (Form  1040).  Each  of  you 
                                              your  joint  business  activity;  however,    may  also  need  to  file  a  separate 

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Schedule  SE  (Form  1040)  to  pay            • If  only  one  spouse  participates  in      tially similar to one of the types of trans-
self-employment tax. If the business was       the business, all of the income from that      actions  that  the  IRS  has  identified  by 
taxed as a partnership before you made         business  is  the  self-employment  earn-      published  guidance  as  a  transaction  of 
the election, the partnership will be trea-    ings  of  the  spouse  who  carried  on  the   interest.
ted as terminating at the end of the pre-      business.
ceding tax year. For information on how        • If both spouses participate, the un-         See  the  Instructions  for  Form  8886 
to report the termination of the partner-      incorporated  business  is  generally  trea-   for  more  details.  See  also  chapter  2  of 
ship, see Pub. 541.                            ted as a partnership and the income and        Pub. 550.
Revoking  the  election. The  election         deductions  are  allocated  to  the  spouses   Capital Construction Fund
can be revoked only with the permission        based on their distributive shares.
of  the  IRS.  However,  the  election  re-    • If either or both spouses are part-          Do not claim on Schedule C the deduc-
mains in effect only for as long as you        ners in a partnership, see Pub. 541.           tion for amounts contributed to a capital 
and your spouse continue to meet the re-       • If both spouses elected to treat the         construction  fund  set  up  under  chap-
quirements to make the election. If you        business  as  a  qualifying  joint  venture,   ter  535  of  title  46  of  the  United  States 
and your spouse fail to meet the require-      see Qualified Joint Venture, earlier.          Code.  Instead,  reduce  the  amount  you 
                                                                                              would otherwise enter on Form 1040 or 
ments  for  any  year,  you  will  need  to    States with community property laws            1040-SR, line 15, by the amount of the 
make  a  new  election  to  be  treated  as  a include Arizona, California, Idaho, Lou-       deduction. Next to line 15, enter “CCF” 
qualified  joint  venture  in  any  future     isiana,  Nevada,  New  Mexico,  Texas,         and the amount of the deduction. For de-
year.                                          Washington,  and  Wisconsin.  See  Pub.        tails, see Pub. 595.
Employer     identification  number            555  for  more  information  about  com-
(EIN). You  and  your  spouse  do  not         munity property laws.                          Additional Information
need to obtain an EIN to make the elec-        Reportable Transaction                         See Pub.  334  for  more  information  for 
tion.  But  you  may  need  an  EIN  to  file                                                 small businesses.
other returns, such as employment or ex-       Disclosure Statement
cise tax returns. To apply for an EIN, see     Use Form 8886 to disclose information 
the Instructions for Form SS-4 or go to        for each reportable transaction in which 
IRS.gov/EIN.                                   you  participated.  Form  8886  must  be       Specific 
Rental real estate business. If you and        filed for each tax year that your federal      Instructions
your spouse make the election for your         income  tax  liability  is  affected  by  your 
                                                                                              Filers of Form 1041.       Do not complete 
rental  real  estate  business,  you  must     participation in the transaction. You may 
                                                                                              the block labeled “Social security num-
each  report  your  share  of  income  and     have to pay a penalty if you are required 
                                                                                              ber  (SSN).”  Instead,  enter  the  EIN  is-
deductions on Schedule E (Form 1040).          to file Form 8886 but don’t do so. You 
                                                                                              sued to the estate or trust on line D.
Rental real estate income is not general-      may also have to pay interest and penal-
ly included in net earnings from self-em-      ties on any reportable transaction under-
ployment subject to self-employment tax        statements. The following are reportable       Line A
and  is  generally  subject  to  the  passive  transactions.                                  Describe the business or professional ac-
loss  limitation  rules.  Electing  qualified  • Any  listed  transaction  that  is  the      tivity  that  provided  your  principal 
joint venture status does not alter the ap-    same  as  or  substantially  similar  to  tax  source of income reported on line 1. If 
plication  of  the  self-employment  tax  or   avoidance transactions identified by the       you  owned  more  than  one  business, 
the passive loss limitation rules.             IRS in published guidance.                     complete a separate Schedule C for each 
More  information.  For  more  informa-        • Any transaction offered to you or a          business. Give the general field or activ-
                                               related party under conditions of confi-       ity and the type of product or service. If 
tion  on  qualified  joint  ventures,  go  to 
                                               dentiality for which you paid an advisor       your  general  field  or  activity  is  whole-
IRS.gov/QJV.
                                               a fee of at least $50,000.                     sale or retail trade, or services connected 
                                               • Certain transactions for which you           with  production  services  (mining,  con-
Community Income                               or a related party have contractual pro-       struction,  or  manufacturing),  also  give 
If you and your spouse wholly own an           tection  against  disallowance  of  the  tax   the type of customer or client; for exam-
unincorporated  business  as  community        benefits.                                      ple,  “wholesale  sale  of  hardware  to  re-
property under the community property          • Certain  transactions  resulting  in  a      tailers”  or  “appraisal  of  real  estate  for 
laws of a state, foreign country, or U.S.      loss of at least $2 million in any single      lending institutions.”
territory,  you  can  treat  your  wholly      tax year or $4 million in any combina-
owned,  unincorporated  business  as  a        tion of tax years. (At least $50,000 for a 
                                                                                              Line B
sole proprietorship, instead of a partner-     single tax year if the loss arose from a 
ship. Any change in your reporting posi-       foreign  currency  transaction  defined  in    Enter on line B the six-digit code from 
tion  will  be  treated  as  a  conversion  of section  988(c)(1),  whether  or  not  the     the Principal  Business  or  Professional 
the entity.                                    loss  flows  through  from  an  S  corpora-    Activity Codes chart at the end of these 
Report  your  income  and  deductions          tion or partnership.)                          instructions.  For  nonstore  retailers,  se-
as follows.                                    • Certain transactions of interest en-         lect the PBA code by the primary prod-
                                               tered into that are the same or substan-       uct that your establishment sells. For ex-
                                                                                              ample,  establishments  primarily  selling 

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prescription and non-prescription drugs,      cash,  property,  or  services).  Income  is 
select PBA code 456110 Pharmacies &           constructively received when it is credi-        Line G
drug retailers.                               ted to your account or made available to         If  your  business  activity  is  not  a  rental 
                                              you  without  restriction.  Also,  show          activity and you meet any of the materi-
Line D                                        amounts  actually  paid  during  the  year       al participation tests, explained next, or 
                                              for deductible expenses. However, if the         the exception  for  oil  and  gas  applies, 
Enter on line D the EIN that was issued 
                                              payment of an expenditure creates an as-         check  the  “Yes”  box.  Otherwise,  check 
to you on Form SS-4. Do not enter your 
                                              set having a useful life that extends be-        “No.” If you check “No,” this activity is 
SSN  on  this  line.  Do  not  enter  another 
                                              yond 12 months or the end of the next            passive. If you have a loss from a pas-
taxpayer's  EIN  (for  example,  from  any 
                                              tax year, it may not be deductible or may        sive activity, see Limit on losses, later. If 
Forms 1099-MISC that you received). If 
                                              be deductible only in part for the year of       you  have  a  profit  from  the  rental  of 
you do not have an EIN, leave line D 
                                              the payment. See chapter 2 of Pub. 334,          property  to  a  nonpassive  activity,  see 
blank.
                                              Tax Guide for Small Business.                    Recharacterization of Passive Income in 
                                                                                               Pub.  925  to  find  out  how  to  report  the 
You need an EIN only if you have a               For amounts includible in income and 
                                                                                               net income.
qualified retirement plan or are required     deductible  as  expense  under  an  accrual 
to file employment, excise, alcohol, to-      method, see Pub. 538.                            Material  participation.     For  purposes 
bacco, or firearms returns, or are a payer 
of  gambling  winnings.  If  you  need  an       To  change  your  accounting  method,         of the seven material participation tests 
EIN, see the Instructions for Form SS-4.      you must generally file Form 3115. You           listed  later,  participation  generally  in-
Single-member  LLCs.   If  you  are  the      may also have to make an adjustment to           cludes  any  work  you  did  in  connection 
sole owner of an LLC that is not treated      prevent  amounts  of  income  or  expense        with an activity, if you owned an interest 
as  a  separate  entity  for  federal  income from  being  duplicated  or  omitted.  This      in  the  activity  at  the  time  you  did  the 
tax  purposes,  enter  on  line  D  the  EIN  is called a section 481(a) adjustment.           work. The capacity in which you did the 
                                                                                               work does not matter. However, work is 
that was issued to the LLC (in the LLC's         Example. You  change  to  the  cash           not treated as participation if it is work 
legal  name)  for  a  qualified  retirement   method of accounting and choose to ac-           that an owner would not customarily do 
plan,  to  file  employment,  excise,  alco-  count for inventoriable items in the same        in the same type of activity and one of 
hol, tobacco, or firearms returns, or as a    manner  as  non-incidental  materials  and       your  main  reasons  for  doing  the  work 
payer of gambling winnings. If you do         supplies for the 2024 tax year. You ac-          was to avoid the disallowance of losses 
not  have  such  an  EIN,  leave  line  D     crued  sales  in  2023  for  which  you  re-     or  credits  from  the  activity  under  the 
blank.                                        ceived  payment  in  2024.  You  must  re-       passive activity rules.
                                              port those sales in both years as a result 
                                              of  changing  your  accounting  method           Work you did as an investor in an ac-
Line E                                                                                         tivity  is  not  treated  as  participation  un-
                                              and must make a section 481(a) adjust-
Enter  your  business  address.  Show  a      ment to prevent duplication of income.           less  you  were  directly  involved  in  the 
street address instead of a box number.                                                        day-to-day management or operations of 
Include the suite or room number, if any.        A  net  negative  section  481  adjust-       the  activity.  Work  performed  as  an  in-
If you conducted the business from your       ment  is  generally  taken  into  account  in    vestor includes:
home  located  at  the  address  shown  on    the  year  of  change.  A  net  positive  sec-       Studying  and  reviewing  financial 
                                                                                               •
page 1 of your tax return, you don’t have     tion 481(a) adjustment is generally taken        statements or reports on the activity,
to complete this line.                        into account over a period of 4 years. In-           Preparing or compiling summaries 
                                                                                               •
                                              clude any net positive section 481(a) ad-        or analyses of the finances or operations 
                                              justments  on  line  6.  If  the  net  section   of the activity for your own use, and
Line F                                        481(a)  adjustment  is  negative,  report  it        Monitoring  the  finances  or  opera-
                                                                                               •
Generally, you can use the cash method,       in Part V.                                       tions of the activity in a nonmanagerial 
an accrual method, or any other method        More  information. For  more  informa-           capacity.
permitted by the Internal Revenue Code.       tion  about  changing  your  accounting          Participation  by  your  spouse  during 
In all cases, the method used must clear-     method  and  the  section  481(a)  adjust-       the tax year in an activity in which you 
ly reflect income. Unless you are a small     ment,  see  the  Instructions  for  Form         own an interest can be counted as your 
business  taxpayer  (defined  later  under    3115.  Additional  information  is  also         participation in the activity. This rule ap-
Part III), you must use an accrual meth-      available in various revenue procedures.         plies even if your spouse did not own an 
od for sales and purchases of inventory       See Rev. Proc. 2024-23 (and any subse-           interest  in  the  activity  and  whether  or 
items.  Special  rules  apply  to  long-term  quent  revenue  procedures  modifying            not you and your spouse file a joint re-
contracts  (see  section  460  for  details). Rev.  Proc.  2024-23)  for  a  list  of  auto-   turn. However, this rule does not apply 
See also Rev. Proc. 2024-23 for changes       matic  changes,  including  a  description       for purposes of determining whether you 
in  methods  of  accounting,  available  at   of  its  effect  on  prior  lists  of  automatic and your spouse can elect to have your 
IRS.gov/irb/2024-23_IRB#REV-                  changes. Rev. Proc. 2024-23 is available         business treated as a qualified joint ven-
PROC-2024-23.                                 at IRS.gov/irb/2024-23_IRB#REV-                  ture instead of a partnership (see Quali-
If you use the cash method, show all          PROC-2024-23.                                    fied Joint Venture, earlier).
items of taxable income actually or con-
structively  received  during  the  year  (in 

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For  purposes  of  the  passive  activity       in  connection  with  the  activity  (regard-  ties, and pensions. You may also have to 
rules, you materially participated in the       less of whether the person was compen-         file  an  information  return  if  you  sold 
operation of a trade or business activity       sated for the services).                       $5,000 or more of consumer products to 
during  2024  if  you  met  any  of  the  fol-                                                 a  person  on  a  buy-sell,  a  deposit-com-
lowing seven tests.                             Rental of personal property.    General-       mission, or other similar basis for resale.
                                                ly,  a  rental  activity  (such  as  long-term 
1. You  participated  in  the  activity 
                                                equipment leasing) is a passive activity       Note.    Line I doesn't apply to filers of 
for more than 500 hours during the tax 
                                                even if you materially participated in the     Form 1040-SS.
year.
                                                activity. However, if you met any of the 
                                                                                                        The Guide  to  Information  Re-
2. Your  participation  in  the  activity       five  exceptions  listed  under Rental  Ac-
                                                                                               TIP      turns  in  the  2024  General  In-
for the tax year was substantially all of       tivities  in  the  Instructions  for  Form 
                                                                                                        structions for Certain Informa-
the participation in the activity of all in-    8582,  the  rental  of  the  property  is  not 
                                                                                               tion  Returns  identifies  which  Forms 
dividuals (including individuals who did        treated as a rental activity and the mate-
                                                                                               1099  must  be  filed,  the  amounts  to  re-
not own any interest in the activity) for       rial  participation  rules  explained  earlier 
                                                                                               port, and the due dates for the required 
the tax year.                                   apply.
                                                                                               Forms  1099.  For  information,  see 
3. You  participated  in  the  activity         Exception  for  oil  and  gas.  If  you  are   IRS.gov/instructions/Form1099.
for more than 100 hours during the tax          filing Schedule C to report income and 
year,  and  you  participated  at  least  as    deductions  from  an  oil  or  gas  well  in 
much  as  any  other  person  for  the  tax     which  you  own  a  working  interest  di-
year. This includes individuals who did         rectly or through an entity that does not      Part I. Income
not own any interest in the activity.           limit your liability, check the “Yes” box. 
4. The  activity  is  a  significant  par-      The activity of owning a working inter-        Except as otherwise provided in the In-
ticipation  activity  for  the  tax  year,  and est is not a passive activity, regardless of   ternal  Revenue  Code,  gross  income  in-
you participated in all significant partici-    your participation.                            cludes income from whatever source de-
pation activities for more than 500 hours       Limit on losses. Your business activity        rived.  In  certain  circumstances,  howev-
during the year. An activity is a “signifi-     loss may be limited if you checked the         er, gross income does not include extra-
cant participation activity” if it involves     “No”  box  on  line  G.  In  addition,  your   territorial income that is qualifying for-
the conduct of a trade or business, you         rental activity loss may be limited even       eign  trade  income.  Use  Form  8873  to 
participated in the activity for more than      if you materially participated. In gener-      figure the extraterritorial income exclu-
100 hours during the tax year, and you          al,  a  business  activity  in  which  you  do sion.  Report  it  on  Schedule  C  as  ex-
did not materially participate under any        not materially participate or a rental ac-     plained  in  the  Instructions  for  Form 
of the material participation tests (other      tivity is a passive activity and you have      8873.
than this test 4).                              to use Form 8582 to apply a limitation 
5. You materially participated in the           that may reduce the loss, if any, that you     If you were a debtor in a chapter 11 
activity  for  any  5  of  the  prior  10  tax  may  enter  on  Schedule  C,  line  31.  For   bankruptcy case during 2024, see Chap-
years.                                          details, see Pub. 925.                         ter 11 Bankruptcy Cases in the Instruc-
                                                                                               tions for Form 1040 (under Income) and 
6. The activity is a personal service                                                          the Instructions for Schedule SE.
                                                Note.   Line G doesn't apply to filers of 
activity in which you materially partici-
                                                Form 1040-SS.
pated  for  any  3  prior  tax  years.  A  per-                                                Be sure to report all income attributa-
sonal service activity is an activity that                                                     ble  to  your  trade  or  business  from  all 
involves performing personal services in        Line H                                         sources.  You  may  receive  one  or  more 
the field of health, law, engineering, ar-      If  you  started  or  acquired  this  business Forms  1099  from  people  who  are  re-
chitecture, accounting, actuarial science,      in 2024, check the box on line H. Also,        quired to provide information to the IRS 
performing  arts,  or  consulting,  or  any     check the box if you are reopening or re-      listing amounts that may be income you 
other trade or business in which capital        starting  this  business  after  temporarily   received as a result of your trade or busi-
is not a material income-producing fac-         closing  it,  and  you  didn’t  file  a  2023  ness activities. The following is a list of 
tor.                                            Schedule C for this business.                  some of the common Forms 1099.
7. Based on all the facts and circum-                                                          • 1099-MISC. For more information 
stances,  you  participated  in  the  activity  Line I                                         about  what  is  reported  on  Form 
                                                                                               1099-MISC, see the        Instructions for Re-
on a regular, continuous, and substantial       If  you  made  any  payment  in  2024  that 
                                                                                               cipient included on that form.
basis for more than 100 hours during the        would  require  you  to  file  any  Forms 
tax year. Your participation in managing        1099,  check  the  “Yes”  box.  Otherwise,     • 1099-NEC.  For  more  information 
                                                                                               about  what  is  reported  on  Form 
the activity does not count in determin-        check the “No” box.
ing  if  you  meet  this  test  if  any  person                                                1099-NEC, see the Instructions for Re-
(except you) (a) received compensation          You may have to file information re-           cipient included on that form.
for  performing  management  services  in       turns for wages paid to employees, cer-        • 1099-K.  For  more  information 
connection with the activity, or (b) spent      tain payments of fees and other nonem-         about what is reported on Form 1099-K, 
more hours during the tax year than you         ployee  compensation,  interest,  rents,       see  the Instructions  for  Payee  included 
spent  performing  management  services         royalties, real estate transactions, annui-    on that form and go to IRS.gov/Gig.

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        Income  you  report  on  Sched-         non-cash  compensation  like  merchan-         gross sales, amounts collected, and gross 
TIP     ule C may be qualified business         dise  or  gift  cards,  you  receive  from  a  profit on amounts collected.
        income and entitle you to a de-         transaction  in  which  you  benefit  from 
duction  on  Form  1040  or  1040-SR,           the use of your name, image, or likeness       Line 2
line  13.  See  Forms  8995  and  8995-A,       is  NIL  income.  Generally,  student-ath-
                                                                                               Report  your  sales  returns  and  allowan-
and    IRS.gov/Newsroom/Facts-About-            letes  are  considered  independent  con-
                                                                                               ces  as  a  positive  number  on  line  2.  A 
the-Qualified-Business-Income-                  tractors for tax purposes and report NIL 
                                                                                               sales  return  is  a  cash  or  credit  refund 
Deduction.                                      income and related expenses as self-em-
                                                                                               you gave to customers who returned de-
                                                ployment income on Schedule C. How-
                                                                                               fective, damaged, or unwanted products. 
                                                ever, report royalties and other NIL in-
                                                                                               A sales allowance is a reduction in the 
Line 1                                          come  that  is  not  self-employment 
                                                                                               selling  price  of  products,  instead  of  a 
Enter  gross  receipts  from  your  trade  or   income on Schedule E instead.
                                                                                               cash or credit refund.
business.  Be  sure  to  check  any  Forms      Medicaid waiver payments.    If you are 
1099  you  received  for  business  income      a sole proprietor in a business of provid-
that must be reported on this line.             ing home care services, certain Medicaid       Line 6
                                                waiver  payments  you  receive  may  be        Report on line 6 business income not re-
If  you  received  one  or  more  Forms                                                        ported elsewhere in Part I. Be sure to in-
                                                nontaxable.  If  you  receive  Medicaid 
1099-NEC,  be  sure  line  1  includes                                                         clude amounts from the following.
                                                waiver payments on a Form 1099-MISC 
amounts properly shown on your Forms                                                            Finance reserve income.
                                                or  Form  1099-NEC  that  are  excludable 
1099-NEC.  If  the  total  amounts  that                                                       •
were  reported  in  box  1  of  Forms                                                          • Scrap sales.
                                                from gross income under Notice 2014-7, 
1099-NEC  are  more  than  the  total  you                                                     • Bad debts you recovered.
                                                report  the  full  amount  of  the  payments 
are  reporting  on  line  1,  attach  a  state-                                                • Interest (such as on notes and 
                                                as income on Schedule C, line 1. Then 
                                                report  the  nontaxable  and  excludable       accounts receivable).
ment explaining the difference.                                                                 State gasoline or fuel tax refunds 
                                                amount  as  an  expense  in  Part  V,  Other   •
Statutory employees. If you received a          Expenses,  and  write  “Notice  2014-7”        you received in 2024.
Form  W-2,  Wage  and  Tax  Statement,          next to the amount. These payments are         • Any amount of credit for biofuel 
and  the  "Statutory  employee"  box  in        nontaxable and excludable from income.         claimed on line 3 of Form 6478.
box 13 of that form was checked, report         Notice  2014-7      is available     at        • Any amount of credit for biodiesel, 
your income and expenses related to that        IRS.gov/irb/2014-04_IRB#NOT-2014-7.            renewable diesel, and sustainable 
income on Schedule C. Enter your statu-         For  more  information  about  these  pay-     aviation fuel claimed on line 11 of Form 
tory  employee  income  from  box  1  of        ments see the related questions and an-        8864.
Form W-2 on line 1 of Schedule C and            swer  at  Certain  Medicaid  Waiver  Pay-      • Credit for federal tax paid on fuels 
check the box on that line. Social securi-      ments  May  Be  Excludable  From               claimed on your 2023 Form 1040 or 
ty  and  Medicare  tax  should  have  been      Income, available      at    IRS.gov/          1040-SR.
withheld from your earnings; as a result,       individuals/certain-medicaid-waiver-           • Prizes and awards related to your 
you do not owe self-employment tax on           payments-may-be-excludable-from-               trade or business.
these  earnings.  Statutory  employees  in-     income.                                        • Amounts you received in your 
clude  full-time  life  insurance  agents,                                                     trade or business as shown on Form 
certain agent or commission drivers and         Installment  sales. Generally,  the  in-       1099-PATR.
traveling  salespersons,  and  certain          stallment  method  cannot  be  used  to  re-   • Any amount of credit for COBRA 
homeworkers.                                    port income from the sale of (a) personal      premium assistance. See your Form(s) 
If you had both self-employment in-             property regularly sold under the install-     941 or Form 944 for 2024 for the 
come  and  statutory  employee  income,         ment  method,  or  (b)  real  property  held   nonrefundable and refundable portions 
you must file two Schedules C. You can-         for resale to customers. But the install-      of this credit that you claimed against 
not  combine  these  amounts  on  a  single     ment  method  can  be  used  to  report  in-   your employment taxes.
Schedule C.                                     come  from  sales  of  certain  residential    • Other kinds of miscellaneous 
                                                lots  and  timeshares  if  you  elect  to  pay business income.
Note.   Statutory  employees  informa-          interest on the tax due on that income af-
tion doesn’t apply to Form 1040-SS fil-         ter the year of sale. See section 453(l)(2)    If the business use percentage of any 
ers.                                            (B) for details. If you make this election,    listed  property  (defined  under Line  13, 
                                                include  the  interest  in  the  total  on     later)  dropped  to  50%  or  less  in  2024, 
        Qualified joint ventures should 
                                                Schedule  2  (Form  1040),  line  14,  and     report on this line any recapture of ex-
!       report rental real estate income        enter the amount of interest and “453(l)       cess depreciation, including any section 
CAUTION not  subject  to  self-employment 
                                                (3)” on the line next to the entry space.      179  expense  deduction.  Use  Part  IV  of 
tax  on  Schedule  E.  See Qualified  Joint 
Venture, earlier, and the Instructions for      If you use the installment method, at-         Form 4797 to figure the recapture. Also, 
Schedule E.                                     tach  a  statement  to  your  return.  Show    if  the  business  use  percentage  drops  to 
                                                separately for 2024 and the 3 preceding        50%  or  less  on  leased  listed  property 
Name, Image, Likeness (NIL) income.             years:  gross  sales,  cost  of  goods  sold,  (other  than  a  vehicle),  include  on  this 
If  you  are  a  student-athlete,  any  mone-   gross profit, percentage of gross profit to    line any inclusion amount. See chapter 5 
tary  or  financial  gain,  including                                                          of Pub. 946 to figure the amount.

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                                               • Multiply  the  number  of  business         Note. A  dealer  in  property  is  a  person 
Part II. Expenses                              miles  driven  by  0.67.  For  example,       who regularly sells property in the ordi-
                                               1,250  business  miles  driven  ×  0.67  =    nary course of their trade or business.
Capitalizing costs of producing prop-          $837.50.
                                                                                                For more information on the capitali-
erty  and  acquiring  property  for  re-       • Add  to  this  amount  your  parking 
                                                                                             zation of commissions and fees, see the 
sale. If  you  produced  real  or  tangible    fees and tolls; and
                                                                                             examples  under  Regulations  section 
personal  property  or  acquired  real  or     • Enter  the  total  on  line  9.  Do  not 
                                                                                             1.263(a)-1(e)(3).
personal  property  for  resale,  you  must    deduct  depreciation,  rent  or  lease  pay-
generally  capitalize  certain  expenses  in   ments,  or  your  actual  operating  expen-
inventory  or  other  property.  These  ex-    ses.                                          Line 11
penses  include  the  direct  costs  of  the                                                 Enter the total cost of contract labor for 
                                               If you deduct actual expenses:
property and any indirect costs properly                                                     the  tax  year.  Contract  labor  includes 
allocable  to  that  property.  Reduce  the    • Include on line 9 the business por-
                                                                                             payments to persons you do not treat as 
                                               tion  of  expenses  for  gasoline,  oil,  re-
amounts on lines 8 through 26, 27b, and                                                      employees  (for  example,  independent 
                                               pairs, insurance, license plates, etc.; and
Part V by amounts capitalized. See Pub.                                                      contractors)  for  services  performed  for 
538 for a discussion of the uniform capi-      • Show depreciation on line 13 and 
                                                                                             your  trade  or  business.  Do  not  include 
                                               rent or lease payments on line 20a.
talization rules.                                                                            contract  labor  deducted  elsewhere  on 
                                               For details, see chapter 4 of Pub. 463.       your  return,  such  as  contract  labor  in-
Exception for a small business tax-
payer. A small  business  taxpayer  (de-       Information  on  your  vehicle.  If  you      cludible on line 17, 21, 26, or 37. Also, 
fined later under Part III) is not required    claim  any  car  and  truck  expenses,  you   do  not  include  salaries  and  wages  paid 
to capitalize certain expenses to invento-     must provide certain information on the       to your employees; instead, see Line 26, 
ry  or  other  property.  See  Pub.  538  for  use  of  your  vehicle  by  completing  one   later.
more details.                                  of the following.                                You must file Form 1099-NEC to re-
                                               1. Complete Schedule C, Part IV, if           port contract labor payments of $600 or 
Exception  for  creative  property.   If 
                                               (a) you are claiming the standard mile-       more  during  the  year.  See  the  Instruc-
you are a freelance artist, author, or pho-
                                               age rate, you lease your vehicle, or your     tions  for  Forms  1099-MISC  and 
tographer, you may be exempt from the 
                                               vehicle is fully depreciated; and (b) you     1099-NEC for details.
capitalization rules. However, your per-
                                               are  not  required  to  file  Form  4562  for 
sonal efforts must have created (or rea-
                                               any other reason. If you used more than 
sonably be expected to create) the prop-                                                     Line 12
                                               one  vehicle  during  the  year,  attach  a 
erty.  This  exception  does  not  apply  to                                                 Enter  your  deduction  for  depletion  on 
                                               statement with the information requested 
any  expense  related  to  printing,  photo-                                                 this  line.  If  you  have  timber  depletion, 
                                               in  Schedule  C,  Part  IV,  for  each  addi-
graphic plates, motion picture films, vid-                                                   attach  Form  T  (Timber).  See  chapter  7 
                                               tional vehicle.
eotapes,  or  similar  items.  These  expen-                                                 of Pub. 225 for additional details.
ses are subject to the capitalization rules.   2. Complete  Form  4562,  Part  V,  if 
For  details,  see Uniform  Capitalization     you  are  claiming  depreciation  on  your            Depletion  is  generally  an  item 
Rules in Pub. 538.                             vehicle or you are required to file Form         !    of tax preference under the Al-
                                               4562 for any other reason (see Line 13,       CAUTION ternative Minimum Tax (AMT). 
                                               later).                                       See section 57.
Line 9
You  can  deduct  the  actual  expenses  of 
operating  your  car  or  truck  or  take  the Line 10                                       Line 13
standard mileage rate. This is true even       Enter the total commissions and fees for 
if you used your vehicle for hire (such as     the  tax  year.  Do  not  include  commis-    Depreciation and section 179 expense 
a taxicab). You must use actual expenses       sions or fees that are capitalized or de-     deduction. Depreciation  is  the  annual 
if you used five or more vehicles simul-       ducted elsewhere on your return.              deduction allowed to recover the cost or 
                                                                                             other  basis  of  business  or  investment 
taneously  in  your  business  (such  as  in   You must file Form 1099-NEC to re-            property having a useful life substantial-
fleet  operations).  You  can’t  use  actual   port  certain  commissions  and  fees  of     ly beyond the tax year. You can also de-
expenses for a leased vehicle if you pre-      $600  or  more  during  the  year.  See  the  preciate  improvements  made  to  leased 
viously  used  the  standard  mileage  rate    Instructions  for  Forms  1099-MISC  and      business  property.  However,  stock  in 
for that vehicle.                              1099-NEC for details.                         trade,  inventories,  and  land  are  not  de-
You  can  take  the  standard  mileage         Sales  of  property. Generally,  commis-      preciable. Depreciation starts when you 
rate for 2024 only if you:                     sions and other fees paid to facilitate the   first use the property in your business or 
• Owned  the  vehicle  and  used  the          sale  of  property  must  be  capitalized.    for  the  production  of  income.  It  ends 
standard  mileage  rate  for  the  first  year However, if you are a dealer in property,     when you take the property out of serv-
you placed the vehicle in service, or          enter  on  line  10  the  commissions  and    ice,  deduct  all  your  depreciable  cost  or 
• Leased  the  vehicle  and  are  using        fees you paid to facilitate the sale of that  other basis, or no longer use the property 
the  standard  mileage  rate  for  the  entire property.                                     in your business or for the production of 
lease period.                                                                                income. You can also elect under section 
If you take the standard mileage rate:                                                       179 to expense part or all of the cost of 

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certain property you bought in 2024 for        You cannot deduct contributions you             the  other  filing  exceptions  listed  in  the 
use  in  your  business.  See  the  Instruc-   made on your behalf as a self-employed          Instructions for Form 8990.
tions for Form 4562 and Pub. 946 to fig-       person for group-term life insurance.           If  you  must  file  Form  8990,  figure 
ure the amount to enter on line 13.                                                            the  limit  on  your  business  interest  ex-
                                               Do not include on line 14 any contri-
When to attach Form 4562. You must             butions  you  made  on  your  behalf  as  a     penses on Form 8990 before completing 
complete and attach Form 4562 only if          self-employed person to an accident and         lines  16a  and  16b.  Follow  the  instruc-
you are claiming:                              health plan. However, you may be able           tions under How to report, later, but re-
• Depreciation on property placed in           to  deduct  on  Schedule  1  (Form  1040),      port  the  reduced  interest  on  lines  16a 
service during 2024;                           line 17, the amount you paid for health         and  16b.  The  interest  you  can't  deduct 
• Depreciation  on  listed  property           insurance  on  behalf  of  yourself,  your      this year will carry forward to next year 
(defined later), regardless of the date it     spouse, and dependents, even if you do          on Form 8990.
was placed in service; or                      not itemize your deductions. See the in-        If you are a small business taxpayer 
• A section 179 expense deduction.             structions  for  line  17,  Schedule  1,  con-  or  meet  one  of  the  other  filing  excep-
If you acquired depreciable property           tained  within  the  Instructions  for  Form    tions for Form 8990, follow the instruc-
for the first time in 2024, see Pub. 946.      1040.                                           tions under How to report, later, and re-
                                                                                               port  all  of  your  deductible  interest  on 
Listed property.  Listed property gener-       You must reduce your line 14 deduc-
                                                                                               lines 16a and 16b.
ally includes, but is not limited to:          tion  by  the  amount  of  any  credit  for 
• Passenger  automobiles  weighing             small employer health insurance premi-          How to report.  If you have a mortgage 
6,000 pounds or less;                          ums  determined  on  Form  8941.  See           on  real  property  used  in  your  business, 
• Any other property used for trans-           Form 8941 and its instructions to deter-        enter  on  line  16a  the  interest  you  paid 
portation  if  the  nature  of  the  property  mine which expenses are eligible for the        for 2024 to banks or other financial in-
lends itself to personal use, such as mo-      credit.                                         stitutions for which you received a Form 
torcycles, pickup trucks, etc.; and                                                            1098  (or  similar  statement).  If  you  did 
• Any  property  used  for  entertain-                                                         not receive a Form 1098, enter the inter-
ment  or  recreational  purposes  (such  as    Line 15                                         est on line 16b.
photographic,  phonographic,  communi-         Deduct  premiums  paid  for  business  in-
                                                                                               If  you  paid  more  mortgage  interest 
cation, and video recording equipment).        surance  on  line  15.  Deduct  on  line  14 
                                                                                               than is shown on Form 1098, include the 
                                               amounts paid for employee accident and 
                                                                                               amount on line 16a. Attach a statement 
Exception.   Listed  property  does  not       health insurance. Do not deduct amounts 
                                                                                               to your return explaining the difference 
include  photographic,  phonographic,          credited  to  a  reserve  for  self-insurance 
                                                                                               and  enter  “See  attached”  in  the  margin 
communication,  or  video  equipment           or premiums paid for a policy that pays 
                                                                                               next to line 16a. Don’t include mortgage 
used  exclusively  in  your  trade  or  busi-  for your lost earnings due to sickness or 
                                                                                               interest that must be capitalized, for ex-
ness  or  at  your  regular  business  estab-  disability.  For  details,  see Pub.  334, 
                                                                                               ample, added to basis. See Pub. 551, un-
lishment. For purposes of this exception,      chapter 8.
a  portion  of  your  home  is  treated  as  a                                                 der  Uniform  Capitalization  Rules,  for 
regular  business  establishment  only  if                                                     details.
that portion meets the requirements un-        Lines 16a and 16b
                                                                                                       The Tax Cuts and Jobs Act, sec-
der section 280A(c)(1) for deducting ex-       Interest allocation rules.   The tax treat-     !       tion  11043,  limited  the  deduc-
penses  for  the  business  use  of  your      ment of interest expense differs depend-        CAUTION tion for mortgage interest paid 
home.                                          ing  on  its  type.  For  example,  home        on home equity loans and lines of credit. 
                                               mortgage  interest  and  investment  inter-
Recapture.   See  Line 6, earlier, if the                                                      See section 163(h)(3)(F).
                                               est are treated differently. “Interest allo-
business  use  percentage  of  any  listed                                                     If  you  and  at  least  one  other  person 
                                               cation”  rules  require  you  to  allocate 
property dropped to 50% or less in 2024.                                                       (other than your spouse if you file a joint 
                                               (classify)  your  interest  expense  so  it  is 
                                               deducted (or capitalized) on the correct        return) were liable for and paid interest 
Line 14                                        line of your return and receives the right      on the mortgage and the other person re-
Deduct contributions to employee bene-         tax  treatment.  These  rules  could  affect    ceived  the  Form  1098,  include  your 
fit  programs  that  are  not  an  incidental  how  much  interest  you  are  allowed  to      share of the interest on line 16b. Attach 
part  of  a  pension  or  profit-sharing  plan deduct on Schedule C.                           a  statement  to  your  return  showing  the 
                                                                                               name and address of the person who re-
included on line 19. Examples are acci-        Generally,  you  allocate  interest  ex-
                                                                                               ceived  the  Form  1098.  In  the  margin 
dent  and  health  plans,  group-term  life    pense by tracing how the proceeds of the 
                                                                                               next to line 16b, enter “See attached.”
insurance, and dependent care assistance       loan  were  used.  See  chapter  4  of Pub. 
programs. If you made contributions on         225, generally, for details.                    If you paid interest in 2024 that also 
your behalf as a self-employed person to                                                       applies to future years, deduct only the 
                                               Limitation  on  business  interest.    You 
a  dependent  care  assistance  program,                                                       part that applies to 2024.
                                               must file Form 8990 to deduct any inter-
complete Form 2441, Parts I and III, to 
                                               est expenses of this trade or business un-
figure  your  deductible  contributions  to 
                                               less  you  are  a small  business  taxpayer     Line 17
that program.
                                               (defined under    Part III) or meet one of      Include on this line fees charged by ac-
                                                                                               countants and attorneys that are ordinary 

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and  necessary  expenses  directly  related                                                censes,  such  as  liquor  licenses,  may 
to operating your business.                   Lines 20a and 20b                            have  to  be  amortized.  See  the  Instruc-
                                              If you rented or leased vehicles, machi-     tions  for  Form  4562,  Depreciation  and 
Include fees for tax advice related to        nery, or equipment, enter on line 20a the    Amortization,  for  more  information  on 
your business and for preparation of the      business portion of your rental cost. But    amortization.
tax forms related to your business. Also,     if you leased a vehicle for a term of 30     • Social security and Medicare taxes 
include  expenses  incurred  in  resolving    days  or  more,  you  may  have  to  reduce  paid to match required withholding from 
asserted tax deficiencies related to your     your deduction by the inclusion amount.      your  employees’  wages.  Reduce  your 
business.                                     See Leasing a Car in chapter 4 of Pub.       deduction  by  the  amount  shown  on 
                                              463 to figure this amount.                   Form 8846, line 4.
For more information, see Pub. 334.
                                                                                           • Federal unemployment tax paid.
                                              Enter  on  line  20b  amounts  paid  to       Federal highway use tax.
                                                                                           •
Line 18                                       rent or lease other property, such as of-     Contributions to a state unemploy-
                                                                                           •
Include on this line your expenses for        fice space in a building.                    ment insurance fund or disability benefit 
office supplies and postage.                                                               fund if they are considered taxes under 
                                              Line 21                                      state law.
Line 19                                       Deduct the cost of incidental repairs and    Do not deduct the following.
Enter  your  deduction  for  the  contribu-   maintenance that do not add to the prop-      Federal  income  taxes,  including 
                                                                                           •
tions  you  made  for  the  benefit  of  your erty's  value  or  appreciably  prolong  its your  self-employment  tax.  However, 
employees  to  a  pension,  profit-sharing,   life.  Do  not  deduct  the  value  of  your you can deduct one-half of your self-em-
or  annuity  plan  (including  SEP,  SIM-     own labor. Do not deduct amounts spent       ployment  tax  on  Schedule  1  (Form 
PLE,  and  SARSEP  plans  described  in       to restore or replace property; they must    1040),  line  15  (but  if  filing  Form 
Pub. 560). If the plan included you as a      be capitalized.                              1040-NR, then only when covered under 
self-employed  person,  enter  the  contri-                                                the U.S. social security system due to an 
butions  made  as  an  employer  on  your     Line 22                                      international social security agreement).
behalf  on  Schedule  1  (Form  1040),        In most cases, you can deduct the cost of    • Estate and gift taxes.
line 16, not on Schedule C.                   materials and supplies only to the extent    • Taxes assessed to pay for improve-
                                              you actually consumed and used them in       ments, such as paving and sewers.
This deduction may be subject to lim-         your business during the tax year (unless    • Taxes  on  your  home  or  personal 
itations. For more information on poten-      you deducted them in a prior tax year).      use property.
tial limitations, see Pub. 560.               However, if you had incidental materials     • State and local sales taxes on prop-
In most cases, you must file the ap-          and supplies on hand for which you kept      erty purchased for use in your business. 
plicable form listed below if you main-       no inventories or records of use, you can    Instead,  treat  these  taxes  as  part  of  the 
tain  a  pension,  profit-sharing,  or  other deduct  the  cost  of  those  you  actually  cost of the property.
funded-deferred compensation plan. The        purchased during the tax year, provided      • State and local sales taxes imposed 
filing  requirement  is  not  affected  by    that method clearly reflects income.         on  the  buyer  that  you  were  required  to 
                                                                                           collect  and  pay  over  to  state  or  local 
whether or not the plan qualified under       You  can  also  deduct  the  cost  of        governments. These taxes are not inclu-
the  Internal  Revenue  Code,  or  whether    books,  professional  instruments,  equip-   ded  in  gross  receipts  or  sales  nor  are 
or not you claim a deduction for the cur-     ment,  etc.,  if  you  normally  use  them   they  a  deductible  expense.  However,  if 
rent tax year. There is a penalty for fail-   within a year. However, if their useful-     the  state  or  local  government  allowed 
ure to timely file these forms.               ness  extends  substantially  beyond  a      you  to  retain  any  part  of  the  sales  tax 
Form  5500-EZ. File  this  form  if  you      year,  you  must  generally  recover  their  you  collected,  you  must  include  that 
have  a  one-participant  retirement  plan    costs through depreciation.                  amount as income on line 6.
that  meets  certain  requirements.  A                                                     • Other taxes and license fees not re-
one-participant plan is a plan that covers                                                 lated to your business.
                                              Line 23
only you (or you and your spouse).
                                              You can deduct the following taxes and 
Form 5500-SF. File this form electroni-       licenses on this line.                       Line 24a
cally  with  the  Department  of  Labor  (at      State and local sales taxes imposed      Enter  your  expenses  for  lodging  and 
efast.dol.gov)  if  you  have  a  small  plan •
                                              on you as the seller of goods or services.   transportation connected with overnight 
(fewer than 100 participants in most ca-      If you collected this tax from the buyer,    travel  for  business  while  away  from 
ses) that meets certain requirements.         you  must  also  include  the  amount  col-  your tax home. In most cases, your tax 
Form 5500.   File this form electronical-     lected  in  gross  receipts  or  sales  on   home is your main place of business, re-
ly  with  the  Department  of  Labor  (at     line 1.                                      gardless  of  where  you  maintain  your 
efast.dol.gov)  for  a  plan  that  does  not • Real  estate  and  personal  property      family home. You can’t deduct expenses 
meet  the  requirements  for  filing  Form    taxes on business assets.                    paid or incurred in connection with em-
5500-EZ or Form 5500-SF.                      • Licenses  and  regulatory  fees  for       ployment away from home if that period 
                                              your trade or business paid each year to     of  employment  exceeds  1  year.  Also, 
For details, see Pub. 560.                    state or local governments. But some li-     you  cannot  deduct  travel  expenses  for 

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your spouse, your dependent, or any oth-        Business meal expenses.       You can de-       Notice 2024-68,          available    at 
er  individual  unless  that  person  is  your  duct a percentage of the actual cost of a       IRS.gov/irb/
employee,  the  travel  is  for  a  bona  fide  meal if the following conditions are met.       2024-41_IRB#NOT-2024-68.
business  purpose,  and  the  expenses                The meal expense was an ordinary          Amount  of  deduction.   For  business 
                                                •
would  otherwise  be  deductible  by  that      and  necessary  expense  in  carrying  on       meals, you can deduct 50% of your busi-
person.                                         your trade or business.                         ness meal expenses, including meals in-
Do not include expenses for meals on            • The expense was not lavish or ex-             curred while away from home on busi-
                                                travagant under the circumstances.              ness. However, for individuals subject to 
this line. Instead, see Line 24b, later. Do 
not  include  entertainment  expenses  on       • You or your employee was present              the Department of Transportation (DOT) 
                                                at the meal.                                    hours  of  service  limits,  the  percentage 
this line.
                                                • The  meal  was  provided  to  a  cur-         for other business meals is increased to 
Instead  of  keeping  records  of  your         rent or potential business customer, cli-       80% for business meals consumed dur-
actual incidental expenses, you can use         ent, consultant, or similar business con-       ing, or incident to, any period of duty for 
an  optional  method  for  deducting  inci-     tact.                                           which those limits are in effect. Individ-
dental expenses only if you did not pay         • In  the  case  of  food  or  beverages        uals subject to the DOT hours of service 
or  incur  meal  expenses  on  a  day  you      provided  during  or  at  an  entertainment     limits include the following.
were  traveling  away  from  your  tax          event, the food and beverages were pur-         • Certain  air  transportation  workers 
home.  The  amount  of  the  deduction  is      chased  separately  from  the  entertain-       (such  as  pilots,  crew,  dispatchers,  me-
$5  a  day.  Incidental  expenses  include      ment, or the cost of the food and bever-        chanics,  and  control  tower  operators) 
fees  and  tips  given  to  porters,  baggage   ages was stated separately from the cost        who are under Federal Aviation Admin-
carriers, bellhops, hotel maids, stewards       of  the  entertainment  on  one  or  more       istration regulations.
or stewardesses and others on ships, and        bills, invoices, or receipts.                   • Interstate  truck  operators  who  are 
                                                                                                under DOT regulations.
hotel servants in foreign countries. They                You cannot avoid the entertain-
                                                                                                • Certain merchant mariners who are 
do  not  include  expenses  for  laundry,       !        ment  disallowance  rule  by  in-      under Coast Guard regulations.
cleaning and pressing of clothing, lodg-        CAUTION  flating the amount charged for 
ing  taxes,  or  the  costs  of  telegrams  or  food and beverages.                             However, you can fully deduct meals 
telephone  calls.  You  cannot  use  this                                                       and incidentals furnished or reimbursed 
method  on  any  day  that  you  use  the       See Notice 2018-76 for examples and             to an employee if you properly treat the 
standard  meal  allowance  (as  explained       more  information.  Notice  2018-76  is         expense  as  wages  subject  to  withhold-
under Line 24b, later).                         available    at               IRS.gov/irb/      ing. You can also fully deduct meals and 
                                                2018-42_IRB#NOT-2018-76.                        incidentals  provided  to  a  nonemployee 
You can’t deduct expenses for attend-                                                           to the extent the expenses are includible 
                                                Standard  meal  allowance.    Instead  of 
ing  a  convention,  seminar,  or  similar                                                      in  the  gross  income  of  that  person  and 
                                                deducting the actual cost of your meals 
meeting  held  outside  the  North  Ameri-                                                      reported on Form 1099-NEC. See chap-
                                                while  traveling  away  from  home,  you 
can  area  unless  the  meeting  is  directly                                                   ter 5 of Pub. 15 (Circular E), Employer’s 
                                                can use the standard meal allowance for 
related to your trade or business and it is                                                     Tax Guide, for details and other excep-
                                                your  daily  meals  and  incidental  expen-
as reasonable for the meeting to be held                                                        tions. See also chapter 8 of Pub. 334.
                                                ses.  Under  this  method,  you  deduct  a 
outside  the  North  American  area  as 
                                                specified  amount,  depending  on  where 
within it. These rules apply to both em-                                                        Daycare providers.       If you qualify as a 
                                                you travel, instead of keeping records of 
ployers and employees. Other rules ap-                                                          family daycare provider, you can use the 
                                                your  actual  meal  expenses.  However, 
ply to luxury water travel.                                                                     standard meal and snack rates, instead of 
                                                you must still keep records to prove the        actual costs, to figure the deductible cost 
For  details  on  travel  expenses,  see        time,  place,  and  business  purpose  of       of meals and snacks provided to eligible 
chapter 1 of Pub. 463.                          your travel.                                    children.  If  you  receive  reimbursement 
                                                The  standard  meal  allowance  is  the         under a food program of the Department 
Line 24b                                        federal  meals  and  incidental  expenses       of  Agriculture,  only  deduct  the  cost  of 
                                                (M&IE)  rate.  You  can  find  these  rates     food that exceeds reimbursement, if any. 
Enter your deductible business meal ex-                                                         See  Pub.  587  for  details,  including  re-
                                                for locations inside and outside the con-
penses. This includes expenses for meals                                                        cordkeeping requirements.
                                                tinental  United  States  by  going  to  the 
while  traveling  away  from  home  for 
                                                General  Services  Administration's  web-
business. Your deductible business meal 
                                                site  at  GSA.gov/travel/plan-book/per-
expenses are a percentage of your actual                                                        Line 25
                                                diem-rates/mie-breakdown.
business meal expenses or standard meal                                                         Deduct  utility  expenses  only  for  your 
allowance.  See   Amount  of  deduction,        See chapter 2 of Pub. 463 for details           trade or business.
later,  for  the  percentage  that  applies  to on  how  to  figure  your  deduction  using 
                                                                                                Local  telephone  service.   If  you  used 
your  actual  meal  expenses  or  standard      the  standard  meal  allowance,  including 
                                                                                                your  home  phone  for  business,  do  not 
meal allowance. In most cases, the per-         special  rules  for  partial  days  of  travel. 
                                                                                                deduct the base rate (including taxes) of 
centage is 50%.                                 For  special  per  diem  rates  and  rules  of 
                                                                                                the first phone line into your residence. 
                                                high  cost  locales,  see  Notice  2023-68, 
                                                                                                But you can deduct any additional costs 
Do not include entertainment expen-             available    at               IRS.gov/irb/
                                                                                                you incurred for business that are more 
ses on this line.                               2023-41_IRB#NOT-2023-68.  See  also 

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than the base rate of the first phone line.   If you have a business use of another          If  you  conduct  more  than  one  busi-
For  example,  if  you  had  a  second  line, home, you can’t use the simplified meth-       ness  that  qualifies  for  this  deduction  in 
you can deduct the business percentage        od for that home. You can use the Form         your home, your election to use the sim-
of the charges for that line, including the   8829 to claim expenses for business use        plified method applies to all your quali-
base rate charges.                            of the other home.                             fied business uses of your home. You are 
                                              Beginning in tax year 2024, filers of          limited to a maximum of 300 square feet 
Line 26                                       Form  1040-SS  can  use  Form  8829  to        for all of the businesses you conduct in 
Enter the total salaries and wages for the    figure their business use of home deduc-       your  home  that  qualify  for  this  deduc-
tax  year  reduced  by  the  amount  of  the  tion, if applicable.                           tion. Allocate the actual square footage 
                                                                                             used  (up  to  the  maximum  300  square 
following credit(s), if applicable.           For  additional  information  about 
                                                                                             feet) among your qualified business uses 
• Work  Opportunity  Credit  (Form            claiming this deduction, see Pub. 587.
                                                                                             in  any  reasonable  manner  you  choose, 
5884).                                             If you are not using the simpli-          but  you  may  not  allocate  more  square 
• Empowerment  Zone  Employment               TIP  fied  method  to  determine  the          feet to a qualified business use than you 
Credit (Form 8844).                                amount  of  expenses  you  may            actually use in that business.
• Credit  for  Employer  Differential         deduct  for  business  use  of  a  home,  do 
Wage Payments (Form 8932).                    not complete the additional entry spaces 
• Employer  Credit  for  Paid  Family         on  line  30  for  total  square  footage  of 
and Medical Leave (Form 8994).                your home and of the part of the home 
Do not reduce your deduction for any          used  for  business.  Instead,  include  the 
portion  of  a  credit  that  was  passed     amount from line 36 of your Form 8829 
through to you from a pass-through enti-      on line 30.
ty.  See  the  instructions  for  the  credit Simplified  method.  The  simplified 
form for more information.                    method  is  an  alternative  to  the  calcula-
Do not include salaries and wages de-         tion, allocation, and substantiation of ac-
ducted  elsewhere  on  your  return  or       tual expenses. In most cases, you’ll fig-
amounts paid to yourself.                     ure  your  deduction  by  multiplying  the 
                                              area (measured in square feet) used reg-
        If  you  provided  taxable  fringe    ularly and exclusively for business, reg-
!       benefits  to  your  employees,        ularly for daycare, or regularly for stor-
CAUTION such  as  personal  use  of  a  car,  age of inventory or product samples, by 
do not deduct as wages the amount ap-         $5. The area you use to figure your de-
plicable  to  depreciation  and  other  ex-   duction  cannot  exceed  300  square  feet. 
penses claimed elsewhere.                     You cannot use the simplified method to 
                                              figure a deduction for rental use of your 
In most cases, you are required to file       home.
Form  W-2  for  each  employee.  See  the 
                                              Electing to use the simplified meth-
General Instructions for Forms W-2 and 
                                              od. You  choose  whether  or  not  to  use 
W-3.
                                              the  simplified  method  each  tax  year. 
                                              Make  the  election  by  using  the  simpli-
Line 27b                                      fied method to figure the deduction for 
Energy efficient commercial buildings         the qualified business use of a home on 
deduction.  You may be able to deduct         a  timely  filed,  original  federal  income 
part or all of the expenses of modifying      tax return for that year. An election for a 
an existing commercial building to make       year,  once  made,  is  irrevocable.  A 
it energy efficient. For details, see Form    change from using the simplified meth-
7205  and  its  instructions.  Attach  Form   od  in  one  year  to  actual  expenses  in  a 
7205 to your tax return.                      succeeding year, or vice versa, is not a 
                                              change  in  method  of  accounting  and 
                                              does not require the consent of the Com-
Line 30                                       missioner.
Business  use  of  your  home. You  may       If you share your home with someone 
be  able  to  deduct  certain  expenses  for  else  who  uses  the  home  for  a  separate 
business  use  of  your  home,  subject  to   business that qualifies for this deduction, 
limitations.  To  claim  a  deduction  for    each  of  you  may  make  your  own  elec-
business  use  of  your  home,  use  Form     tion, but not for the same portion of the 
8829, or you can elect to determine the       home.
amount of the deduction using a simpli-
fied method.

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Instructions for the Simplified Method Worksheet
                                                                                
Use this worksheet to figure the amount of expenses you may deduct for a qualified business use of a home if you are electing to use the simplified method for 
that home. If you are not electing to use the simplified method, use Form 8829.
Line 1. If all gross income from your trade or business is from this qualified business use of your home, figure your gross income limitation as follows.
A.      Enter the amount from Schedule C, line 29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 
B.      Enter any gain derived from the business use of your home and shown on Form 8949 (and included on Schedule D) or Form 
        4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
C.      Add lines A and B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       
D.  Enter the total amount of any losses (as a positive number) shown on Form 8949 (and included on Schedule D) or Form 4797 that are 
        allocable to the business, but not allocable to the business use of the home . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                        
E.      Gross income limitation. Subtract line D from line C. Enter the result here and on line 1 of the simplified method worksheet . . . . . . .                                            
If some of the income is from a place of business other than your home, you must first determine the part of your gross income (Schedule C, line 7, and gains 
from Form 8949, Schedule D and Form 4797) from the business use of your home. In making this determination, consider the amount of time you spent at each 
location as well as other facts. After determining the part of your gross income from the business use of your home, subtract from that amount the total expenses 
shown on Schedule C, line 28, plus any losses shown on Form 8949 (and included on Schedule D) or Form 4797 that are allocable to the business in which you 
use your home but that are not allocable to the business use of the home. Enter the result on line 1 of the simplified method worksheet.
Note: If you had more than one home in which you conducted this business during the year, include only the income earned and the deductions attributable to 
that income during the period you owned the home for which you elected to use the simplified method.
Line 2. If you used the same area for the entire year, enter the smaller of the square feet you actually used or 300. If you and your spouse conducted the business 
as a qualified joint venture, split the square feet between you and your spouse in the same manner you split your other tax attributes. If you shared space with 
someone else, used the home for business for only part of the year, or the area you used changed during the year, see Figuring your allowable expenses for 
business use of the home, before entering an amount on this line. Do not enter more than 300 square feet or, if applicable, the average monthly allowable square 
footage on this line. See Part-year use or area changes (for simplified method only), later, for more information on how to figure your average monthly 
allowable square footage. 
Line 3b. If your qualified business use is providing daycare, you may need to account for the time that you used the same part of your home for other purposes. 
If you used the part of your home exclusively and regularly for providing daycare, enter 1.0 on line 3b. If you did not use the part of your home exclusively for 
providing daycare, complete the Daycare Facility Worksheet to figure what number to enter on line 3b. 
Line 6. Because you are using the simplified method this year, you cannot deduct the amounts you entered on lines 6a and 6b this year. If you file Form 8829 in 
a later year for your qualified business use of this home, you will be able to include these expenses when you figure your deduction. 
6a.     If you didn’t file a 2023 Form 8829, your carryover of prior-year operating expenses is the amount of operating expenses shown in Part 
        IV of the last Form 8829, if any, that you filed to claim a deduction for business use of the home. If you filed Form 1040-SS prior to 
        2024 and used a worksheet in Pub. 587 to figure your carryover of unallowed expenses, your carryover of prior-year operating expenses 
        is the amount of operating expenses shown on your last worksheet from Pub. 587, if any, that you used to claim a deduction for business 
        use of the home. This will be the amount from line 6a of the Simplified Method Worksheet or line 41 of the Worksheet to Figure the 
        Deduction for Business Use of Your Home in Pub. 587.
6b.     If you didn’t file a 2023 Form 8829, your carryover of prior-year excess casualty losses and depreciation is the amount of excess 
        casualty losses and depreciation shown in Part IV of the last Form 8829, if any, that you filed to claim a deduction for business use of 
        the home. If you filed Form 1040-SS prior to 2024 and used a worksheet in Pub. 587 to figure your carryover of unallowed expenses, 
        your carryover of prior-year excess casualty losses and depreciation is the amount of excess casualty losses and depreciation shown on 
        your last worksheet from Pub. 587, if any, that you used to claim a deduction for business use of the home. This will be the amount from 
        line 6b of the Simplified Method Worksheet or line 42 of the Worksheet to Figure the Deduction for Business Use of Your Home in Pub. 
        587.

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Simplified Method Worksheet                                                                                                                                    Keep for Your Records
1. Enter the amount of the gross income limitation. See the Instructions for the Simplified Method Worksheet above  . . . . . . . .                                          1.   

2. Allowable square footage for the qualified business use. Don’t enter more than 300 square feet. See the Instructions for the                                                   
                                                                                                                                                                             2.
   Simplified Method Worksheet above  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3. Simplified method amount
   a.   Maximum allowable amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               3a.  $5
   b.   For daycare facilities not used exclusively for business, see the instructions for line 3b of this worksheet above, and enter 
        the decimal amount from the Daycare Facility Worksheet; otherwise, enter 1.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               3b.  
   c.   Multiply line 3a by line 3b and enter the result to 2 decimal places . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                     3c.  

4. Multiply line 2 by line 3c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        4.   

5. Allowable expenses using the simplified method. Enter the smaller of line 1 or line 4 here and include that amount on 
   Schedule C, line 30. If zero or less, enter -0-             . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.   

6. Carryover of unallowed expenses from a prior year that are not allowed in 2024. Form 1040-SS filers, see the instructions 
   above before completing.
   a.   Operating expenses. Enter the amount from your last Form 8829, line 43 (line 42 if before 2018). See the instructions for 
        line 6a above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6a.  
   b.   Excess casualty losses and depreciation. Enter the amount from your last Form 8829, line 44 (line 43 if before 2018). See 
        the instructions for line 6b above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .           6b.  

                                                                             Instructions for the Daycare Facility Worksheet
         
Use this worksheet to figure the percentage to use on line 3b of the Simplified Method Worksheet. If you don’t use the area of your home exclusively for 
daycare, you must reduce the prescribed rate before figuring your deduction using the simplified method.

   TIP  If you used at least 300 square feet for daycare regularly and exclusively during the year, then you don’t need to complete this worksheet. This 
        worksheet is only needed if you did not use the allowable area exclusively for daycare.

Line 1. Enter the total number of hours the facility was used for daycare during the year.
Example. Your home is used Monday through Friday for 12 hours per day for 250 days during the year. It’s also used on 50 Saturdays for 8 hours a day. Enter 
3,400 hours on line 4 (3,000 hours for weekdays plus 400 hours for Saturdays).
Line 2. If you used your home for daycare during the entire year, multiply 365 days (366 for a leap year) by 24 hours, and enter the result. 
If you started or stopped using your home for daycare during the year, you must prorate the number of hours based on the number of days the home was 
available for daycare. Multiply 24 hours by the number of days available and enter the result.

Daycare Facility Worksheet                     (for simplified method)
1. Multiply days used for daycare during the year by hours used per day                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1.  
2. Total hours available for use during the year. See the Instructions for the Daycare Facility Worksheet                      . . . . . . . . . . . . . . .   2.  
3. Divide line 1 by line 2. Enter the result as a decimal amount here and on line 3b of the Simplified Method 
   Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.  

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        If you used your home for more          sheet  in  Pub.  587  to  figure  your  actual Shared  use  (for  simplified  method 
   !    than  one  business,  you  will         expenses  that  you  could  carry  over  to    only). If  you  share  your  home  with 
CAUTION need  to  file  a  separate  Sched-     the next year, you can't claim those ex-       someone else who uses the home for a 
ule C for each business. Don’t combine          penses  if  you  are  using  the  simplified   separate  business  that  also  qualifies  for 
your  deductions  for  each  business  use      method. Instead, the amount of your Op-        this deduction, you may not include the 
on a single Schedule C.                         erating  expenses  and Excess  casualty        same  square  feet  to  figure  your  deduc-
                                                losses and depreciation from your work-        tion as the other person. You must allo-
   Business  use  of  more  than  one           sheet in Pub. 587 that were not allowed        cate  the  shared  space  between  you  and 
home. You  may  have  used  more  than          will be carried over to the next year that     the other person in a reasonable manner.
one home in your business. If you used          you  use  actual  expenses  to  figure  your 
                                                                                               Example.    Taylor  and  Logan  are 
more than one home for the same busi-           deduction. The next time you claim ac-
                                                                                               roommates. Taylor uses 300 square feet 
ness during 2024, you may elect to use          tual  expenses  you  need  to  file  Form 
                                                                                               of  their  home  for  a  qualified  business 
the  simplified  method  for  only  one         8829.
                                                                                               use. Logan uses 200 square feet of their 
home;  you  must  file  a  Form  8829  to 
                                                Depreciation of home.  You can’t de-           home  for  a  separate  qualified  business 
claim a business use of the home deduc-
                                                duct any depreciation (including any ad-       use.  The  qualified  business  uses  share 
tion  for  any  additional  home.  If  one  or 
                                                ditional  first-year  depreciation)  or  sec-  100 square feet. In addition to the por-
more of the homes were not used for the 
                                                tion 179 expense for the portion of your       tion  that  they  don’t  share,  Taylor  and 
entire  year  (for  example,  you  moved 
                                                home that is used in a qualified business      Logan  can  both  claim  50  of  the  100 
during  the  year),  see Part-year  use  or 
                                                use  if  you  figure  the  deduction  for  the square feet or divide the 100 square feet 
area changes (for simplified method on-
                                                business  use  of  your  home  using  the      between them in any reasonable manner. 
ly), later, and Columns (a) and (b) in the 
                                                simplified method. The depreciation de-        If  divided  evenly,  Taylor  could  claim 
Instructions for Form 8829.
                                                duction allowable for that portion of the      250  square  feet  using  the  simplified 
   Other  requirements  must  still  be         home for that year is deemed to be zero.       method  and  Logan  could  claim  150 
met.  You must still meet all the use re-                                                      square feet.
                                                        Although  you  can’t  deduct  any 
quirements  to  claim  a  deduction  for 
                                                TIP     depreciation or section 179 ex-        Part-year  use  or  area  changes  (for 
business use of the home. The simplified 
                                                        pense  for  the  portion  of  your     simplified method only).  If your quali-
method is only an alternative to the cal-
                                                home that is a qualified business use be-      fied business use was for a portion of the 
culation,  allocation,  and  substantiation 
                                                cause  you  elect  to  use  the  simplified    tax  year  (for  example,  a  seasonal  busi-
of actual expenses. The simplified meth-
                                                method, you may still claim depreciation       ness,  a  business  that  begins  during  the 
od is not an alternative to the exclusivity 
                                                or the section 179 expense deduction on        year, or you moved during the year) or 
and other tests that must be met in order 
                                                other assets (for example, furniture and       you changed the square footage of your 
to  qualify  for  this  deduction.  For  more 
                                                equipment)  used  in  the  qualified  busi-    qualified business use, your deduction is 
information  about  qualifying  business 
                                                ness use of your home.                         limited  to  the  average  monthly  allowa-
uses, see Qualifying for a Deduction in 
                                                                                               ble square footage. You figure the aver-
Pub. 587.                                       Figuring  your  allowable  expenses  for       age  monthly  allowable  square  footage 
   Gross   income        limitation. The        business use of the home. You will fig-        by  adding  the  amount  of  allowable 
amount of your deduction is still limited       ure  the  deduction  using  Form  8829  or     square feet you used in each month and 
to the gross income derived from quali-         the  Simplified  Method  Worksheet,  or        dividing the sum by 12.
fied  business  use  of  the  home  reduced     both.
                                                                                               When  determining  the  average 
by  the  business  deductions  that  are  not           You may not use the simplified         monthly  allowable  square  footage,  you 
related to your use of the home. If this        !       method  and  also  file  Form          can’t take more than 300 square feet into 
limitation  reduces  the  amount  of  your      CAUTION 8829  for  the  same  qualified 
                                                                                               account for any one month. Additional-
deduction, you can’t carry over the dif-        business use of the same home.                 ly,  if  your  qualified  business  use  was 
ference to another tax year.                                                                   less than 15 days in a month, use -0- for 
                                                Using  Form  8829.     Use  Form  8829 
   Carryover  of  actual  expenses  from                                                       that month.
                                                to figure and claim this deduction for a 
Form 8829. If you used Form 8829 in a                                                          Example 1.  Finley files a federal in-
                                                home  if  you  are  not  or  cannot  use  the 
prior year, and you had actual expenses                                                        come tax return on a calendar year basis. 
                                                simplified method for that home. For in-
that  you  could  carry  over  to  the  next                                                   On  July  20,  Finley  began  using  400 
                                                formation about claiming this deduction 
year,  you  can’t  claim  those  expenses  if                                                  square  feet  of  the  home  for  a  qualified 
                                                using  Form  8829,  see  the  Instructions 
you are using the simplified method. In-                                                       business use. Finley continued to use the 
                                                for Form 8829 and Pub. 587.
stead,  the  actual  expenses  from  Form                                                      400 square feet until the end of the year. 
8829 that were not allowed will be car-         Using  the  simplified  method.     Use        Finley's  average  monthly  allowable 
ried  over  to  the  next  year  that  you  use the Simplified  Method  Worksheet  in          square  footage  is  125  square  feet  (300 
actual  expenses  to  figure  your  deduc-      these instructions to figure your deduc-       square feet for August through Decem-
tion.                                           tion for a qualified business use of your      ber divided by the number of months in 
                                                home if you are electing to use the sim-
   Carryover  of  actual  expenses  for                                                        the  year  ((300  +  300  +  300  +  300  + 
                                                plified method for that home.
Form 1040-SS filers.     If you filed Form                                                     300)/12)).
1040-SS prior to 2024 and used a work-

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Example  2. Riley  files  a  federal  in-      the additional entry spaces on line 30 for     or year unallowed passive activity losses 
come tax return on a calendar year basis.      that home only. Include the amount from        you may claim this year for this activity. 
On  April  20,  Riley  began  using  100       line  5  of  the  Simplified  Method  Work-    Use Form 8582 to figure the amount of 
square  feet  of  the  home  for  a  qualified sheet on line 30.                              prior  year  unallowed  passive  activity 
business use. On August 5, Riley expan-        If  you  itemize  your  deductions  on         losses  you  may  include  on  line  31.  Be 
ded the area of qualified business use to      Schedule  A  (Form  1040),  you  may  de-      sure  to  indicate  that  you  are  including 
350 square feet. Riley continued to use        duct  your  mortgage  interest,  real  estate  prior year passive activity losses by en-
the 350 square feet until the end of the       taxes, and casualty losses on Schedule A       tering  "PAL"  to  the  left  of  the  entry 
year. Riley's average monthly allowable        (Form  1040)  as  if  you  didn’t  use  your   space.
square  footage  is  150  square  feet  (100   home for business. You can’t deduct any        If you checked the "No" box on line 
square  feet  for  May  through  July  and     excess mortgage interest, excess real es-      G,  see  the  Instructions  for  Form  8582; 
300 square feet for August through De-         tate  taxes,  or  excess  casualty  losses  on you  may  need  to  include  information 
cember  divided  by  the  number  of           Schedule C for this home.                      from this schedule on Form 8582, even 
months in the year ((100 + 100 +100 +                                                         if you have a net profit.
                                               Use Part II of Schedule C to deduct 
300 + 300 + 300 + 300 + 300)/12)).
                                               business  expenses  that  are  unrelated  to   Rental  real  estate  activity.   Unless 
Example 3.  Carter files a federal in-         the  qualified  business  use  of  the  home   you  are  a  qualifying  real  estate  profes-
come tax return on a calendar year basis.      (for  example,  expenses  for  advertising,    sional,  a  rental  real  estate  activity  is  a 
From January 1 through July 16, Carter         wages,  or  supplies,  or  depreciation  of    passive  activity,  even  if  you  materially 
used 300 square feet of the home for a         equipment or furniture).                       participated in the activity. If you have a 
qualified business use. On July 17, Car-                                                      loss, you may need to file Form 8582 to 
                                               Deduction  figured  on  multiple 
ter moved to a new home and immedi-                                                           apply a limitation that may reduce your 
                                               forms. If you used more than one home 
ately began using 200 square feet of the                                                      loss. See the Instructions for Form 8582.
                                               for  a  business  during  the  year,  use  a 
new  home  for  the  same  qualified  busi-
                                               Form  8829  for  each  home  or  use  the      Reporting  your  net  profit  or  loss. 
ness use. Using the simplified method to 
                                               simplified  method  for  one  home  and        Once you have figured your net profit or 
deduct  expenses  for  the  qualified  busi-
                                               Form  8829  for  any  other  home.  Com-       loss, report it as follows.
ness use for the previous home, Carter’s 
                                               bine  the  amount  you  figured  using  the 
average monthly allowable square foot-                                                                If  you  enter  a  loss  on  line  31, 
                                               simplified method and the amounts you 
age is 175 square feet (300 square feet                                                       !       you  may  have  an  excess  busi-
                                               figured  on  your  Forms  8829,  and  then 
for January through July divided by the                                                       CAUTION ness loss. Use Form 461 to fig-
                                               enter the total on line 30 of the Sched-
number  of  months  in  the  year  ((300  +                                                   ure your excess business loss.
                                               ule C for that business.
300 + 300 + 300 + 300 + 300 + 300)/
12)). Carter also prepared Form 8829 to                                                       Individuals.   Enter your net profit or 
deduct  the  actual  expenses  associated      Line 31                                        loss on line 31 and include it on Sched-
with  the  qualified  business  use  of  the   Figuring  your  net  profit  or  loss. If      ule 1 (Form 1040), line 3. Also, include 
new home.                                      your  expenses  (including  the  expenses      your net profit or loss on Schedule SE, 
Once  you  have  determined  your  al-         you  report  on  line  30)  are  more  than    line  2.  However,  if  you  are  a  statutory 
lowable square footage, enter the result       your gross income, don’t enter your loss       employee or notary public, see Statutory 
on  line  2  of  the  Simplified  Method       on  line  31  until  you  have  applied  the   employees or Notary public, later.
Worksheet.                                     at-risk rules and the passive activity loss    Nonresident  aliens.       Enter  your  net 
        If  you  moved  during  the  year,     rules. To apply these rules, follow the in-    profit or loss on line 31 and include it on 
                                               structions  under Line  32,  later,  and  the  Schedule  1  (Form  1040),  line  3.  You 
CAUTION footage  will  generally  be  less 
!       your average allowable square          Instructions for Form 8582. After apply-       should  also  include  this  amount  on 
than 300.                                      ing  those  rules,  the  amount  on  line  31  Schedule SE, line 2, if you are covered 
                                               will be your loss, and it may be smaller       under  the  U.S.  social  security  system 
        You  can  use  the  Area  Adjust-      than the amount you figured by subtract-       due  to  an  international  social  security 
TIP     ment Worksheet in Pub. 587 to          ing line 30 from line 29.                      agreement currently in effect. See the In-
        help you determine the allowa-         If  your  gross  income  is  more  than        structions for Schedule SE for informa-
ble square footage to enter on line 2 of       your  expenses  (including  the  expenses      tion  on  international  social  security 
the Simplified Method Worksheet.               you  report  on  line  30),  and  you  don’t   agreements. However, if you are a statu-
                                               have prior year unallowed passive activ-       tory employee or notary public, see Stat-
Reporting your expenses for business                                                          utory employees or Notary public, later.
                                               ity losses, subtract line 30 from line 29. 
use of the home. If you didn’t use the 
                                               The result is your net profit.
simplified  method,  include  the  amount                                                     Trusts  and  estates.      Enter  the  net 
from line 36 of Form 8829 on line 30 of        If  your  gross  income  is  more  than        profit or loss on line 31 and include it on 
the  Schedule  C  you  are  filing  for  that  your  expenses  (including  the  expenses      Form 1041, line 3.
business.                                      you report on line 30), and you have pri-
                                               or  year  unallowed  passive  activity  los-   Statutory  employees.      Enter  your  net 
If you used the simplified method. If          ses, don’t enter your net profit on line 31    profit or loss on line 31 and include it on 
you  elect  to  use  the  simplified  method   until you have figured the amount of pri-      Schedule 1 (Form 1040), line 3. Howev-
for the business use of a home, complete                                                      er, do not report this amount on Sched-

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ule  SE,  line  2.  If  you  were  a  statutory ness), and for which you are not person-        activity.  Follow  the  Instructions  for 
employee  and  you  are  required  to  file     ally responsible to repay. However, there       Form  6198  to  determine  how  much  of 
Schedule  SE  because  of  other  self-em-      is  an  exception  for  certain  nonrecourse    your  Schedule  C  loss  will  be  allowed. 
ployment  income,  see  the  Instructions       financing  borrowed  by  you  in  connec-       After you figure the amount of your loss 
for Schedule SE.                                tion with holding real property. See the        that  is  allowed  under  the  at-risk  rules, 
                                                Instructions  for  Form  6198  and  Pub.        you may need to complete Form 8582 to 
Notary public.   Do not enter your net 
                                                925.                                            figure  the  passive  activity  loss  to  enter 
profit  from  line  31  on  Schedule  SE, 
line  2,  unless  you  are  required  to  file  • Cash,  property,  or  borrowed                on line 31. See the Instructions for Form 
                                                amounts  used  in  the  business  (or  con-     8582 for details.
Schedule  SE  because  you  have  other 
                                                tributed  to  the  business,  or  used  to  ac-
self-employment  income.  See  the  In-                                                                If you checked box 32b because 
                                                quire  the  business)  that  are  protected 
structions for Schedule SE.                                                                     !      some  investment  is  not  at  risk 
                                                against  loss  by  a  guarantee,  stop-loss     CAUTION
                                                                                                       and  you  do  not  attach  Form 
        You can deduct one-half of your         agreement, or other similar arrangement 
                                                                                                6198, the processing of your return may 
TIP     self-employment  tax  on  Sched-        (excluding casualty insurance and insur-
                                                                                                be delayed.
        ule 1 (Form 1040), line 15. See         ance against tort liability).
the Instructions for Schedule SE for de-        • Amounts  borrowed  for  use  in  the          At-risk loss deduction.  Any loss from 
tails.                                          business from a person who has an inter-        this business not allowed for 2024 only 
                                                est in the business, other than as a cred-      because of the at-risk rules is treated as a 
Community  income.   If  you  and  your         itor,  or  who  is  related  under  section     deduction  allocable  to  the  business  in 
spouse  had  community  income  and  are        465(b)(3)(C)  to  a  person  (other  than       2025.
filing  separate  returns,  see  the  Instruc-  you) having such an interest.                   More information.        For details, see the 
tions  for  Schedule  SE  before  figuring 
self-employment tax.                            Figuring your loss.   Before determining        Instructions  for  Form  6198  and  Pub. 
                                                your loss, check box 32a or 32b to indi-        925.
Earned  income  credit  (EIC).    If  you       cate whether the loss from your business 
have a net profit on line 31, this amount       activity  is  limited  by  the  at-risk  rules. 
is  earned  income  and  may  qualify  you      Follow the instructions, next, that apply 
for the EIC.                                    to your box 32 activity.                        Part III. Cost of 
        To figure your EIC, use the in-                                                         Goods Sold
                                                Note.  Line 32 doesn't apply to filers of 
CAUTION line  27.  Complete  all  applica-
!       structions  for  Form  1040,            Form 1040-SS.                                   In most cases, if you engaged in a trade 
                                                                                                or business in which the production, pur-
ble steps plus Worksheet B. If you are re-      All  investment  is  at  risk.     If  all 
                                                                                                chase, or sale of merchandise was an in-
quired to file Schedule SE, remember to         amounts  are  at  risk  in  this  business, 
                                                                                                come-producing  factor,  you  must  take 
enter  one-half  of  your  self-employment      check  box  32a.  If  you  answered  “Yes” 
                                                                                                inventories into account at the beginning 
tax in Part 1, line 1d, of Worksheet B.         on line G, your loss will not be reduced 
                                                                                                and end of your tax year.
                                                by the at-risk rules or the passive activi-
                                                ty  loss  rules.  See Line  31,  earlier,  for  Exception  for  small  business  taxpay-
Line 32                                         how to report your loss.                        ers. If you are a small business taxpay-
                                                                                                er, you can choose not to keep an inven-
        You  don’t  need  to  complete          If you answered “No” on line G, you 
                                                                                                tory, but you must still use a method of 
TIP     line 32 if line 7 is more than the      may need to complete Form 8582 to fig-
                                                                                                accounting for inventory that clearly re-
        total of lines 28 and 30.               ure your loss to enter on line 31. See the 
                                                                                                flects income. If you choose not to keep 
                                                Instructions for Form 8582 for details.
                                                                                                an  inventory,  you  won't  be  treated  as 
At-risk  rules. In  most  cases,  if  you 
                                                Some  investment  is  not  at  risk.   If       failing to clearly reflect income if your 
have a business loss and amounts inves-
                                                some  investment  is  not  at  risk,  check     method  of  accounting  for  inventory 
ted in the business for which you are not 
                                                box 32b; the at-risk rules apply to your        treats inventory as non-incidental mate-
at risk, complete Form 6198 to apply a 
                                                loss.  Be  sure  to  attach  Form  6198  to     rial or supplies, or conforms to your fi-
limitation  that  may  reduce  your  loss. 
                                                your return.                                    nancial accounting treatment of invento-
The  at-risk  rules  generally  limit  the 
amount  of  loss  (including  loss  on  the     If  you  answered  "Yes"  on  line  G,          ries. If, however, you choose to keep an 
disposition  of  assets)  you  can  claim  to   complete Form 6198 to figure the loss to        inventory, you must generally value the 
the  amount  you  could  actually  lose  in     enter  on  line  31.  The  passive  activity    inventory  each  year  to  determine  your 
the business.                                   loss rules do not apply. See Line 31, ear-      cost of goods sold in Part III of Sched-
                                                lier, for how to report your loss.              ule C.
Check box 32b if you have amounts 
invested in this business for which you         If you answered "No" on line G, the             Small business taxpayer.      You quali-
are not at risk, such as the following.         passive  activity  loss  rules  may  apply.     fy as a small business taxpayer if you (a) 
• Nonrecourse loans used to finance             First, complete Form 6198 to figure the         have  average  annual  gross  receipts  of 
the business, to acquire property used in       amount  of  your  profit  or  (loss)  for  the  $30  million  or  less  for  the  3  prior  tax 
the business, or to acquire the business        at-risk  activity,  which  may  include         years,  and  (b)  are  not  a  tax  shelter  (as 
that are not secured by your own proper-        amounts  reported  on  other  forms  and        defined in section 448(d)(3)).
ty (other than property used in the busi-       schedules, and the at-risk amount for the 

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If your business has not been in exis-         Line  33  doesn't  apply  to  filers  of     You  may  maintain  written  evidence 
tence  for  all  of  the  3-tax-year  period  Form 1040-SS.                                 by  using  an  electronic  storage  system 
used in figuring average gross receipts,                                                    that  meets  certain  requirements.  For 
base  your  average  on  the  period  it  has Line 35                                       more  information  about  electronic  stor-
existed, and if your business has a pred-                                                   age systems, see Pub. 583.
                                              If you are changing your method of ac-
ecessor entity, include the gross receipts 
                                              counting  beginning  with  2024,  refigure 
of  the  predecessor  entity  from  the 
                                              last  year's  closing  inventory  using  your 
3-tax-year period when figuring average 
                                              new method of accounting and enter the 
gross receipts. If your business (or pred-                                                  Part V. Other 
                                              result on line 35. If there is a difference 
ecessor  entity)  had  short  tax  years  for                                               Expenses. Line 48
                                              between  last  year's  closing  inventory 
any  of  the  3-tax-year  period,  annualize 
                                              and the refigured amount, attach an ex-
your  business'  gross  receipts  for  the                                                  Include all ordinary and necessary busi-
                                              planation and take it into account when 
short  tax  years  that  are  part  of  the                                                 ness  expenses  not  deducted  elsewhere 
                                              figuring your section 481(a) adjustment. 
3-tax-year period.                                                                          on Schedule C. List the type and amount 
                                              For details, see the example under   Line     of each expense separately in the space 
See Pub. 538 for more information.            F, earlier.                                   provided. Enter the total on lines 48 and 
Treating inventory as non-incidental                                                        27a. Do not include the cost of business 
material or supplies.  If you account for                                                   equipment or furniture; replacements or 
                                                                                            permanent improvements to property; or 
inventories  as  materials  and  supplies     Part IV. Information 
that  are  not  incidental,  you  deduct  the                                               personal,  living,  and  family  expenses. 
amounts paid to acquire or produce the        on Your Vehicle                               Do not include charitable contributions. 
inventoriable items (treated as materials                                                   Also, you can’t deduct fines or penalties 
                                                                                            paid  to  a  government  for  violating  any 
and supplies) in the year in which they       Line 44b
are first used or consumed in your oper-                                                    law.  For  details  on  business  expenses, 
                                              In  most  cases,  commuting  is  travel  be-
ations.                                                                                     see Pub. 334, chapter 8.
                                              tween your home and a work location. If 
Financial  accounting  treatment  of          you  converted  your  vehicle  during  the    Amortization. Include  amortization  in 
inventories. Your  financial  accounting      year  from  personal  to  business  use  (or  this part. For amortization that begins in 
treatment  of  inventories  is  determined    vice versa), enter your commuting miles       2024, complete and attach Form 4562.
with regard to the method of accounting       only for the period you drove your vehi-      You can amortize such costs as:
you  use  in  your  applicable  financial     cle for business.                             • The  cost  of  pollution-control  fa-
statement  (as  defined  in  section  451(b)                                                cilities;
                                               Travel that meets any of the follow-
(3)) or, if you don’t have an applicable                                                    • Amounts paid for research and ex-
                                              ing  conditions  isn't  commuting;  it  is 
financial  statement,  with  regard  to  the                                                perimentation;
                                              considered deductible business travel.
method  of  accounting  you  use  in  your                                                  • Amounts  paid  to  acquire,  protect, 
books  and  records  that  have  been  pre-    • You have at least one regular work         expand,  register,  or  defend  trademarks 
                                              location away from your home and the 
pared in accordance with your account-                                                      or trade names; or
                                              travel is to a temporary work location in 
ing procedures.                                                                             • Goodwill and certain other intangi-
                                              the same trade or business, regardless of     bles.
More  information.     For  more  infor-      the distance. Generally, a temporary 
mation  about  this  exception  for  small    work location is one where your               In  most  cases,  you  cannot  amortize 
businesses using this method of account-      employment is expected to last 1 year or      real property construction period interest 
ing  for  inventoriable  items,  see  Pub.    less. See Pub. 463 for more details.          and  taxes.  Special  rules  apply  for  allo-
538.                                           • The travel is to a temporary work          cating interest to real or personal proper-
                                              location outside the metropolitan area        ty produced in your trade or business.
Changing  your  method  of  account-
                                              where you live and normally work.             For  a  complete  list,  see  the  instruc-
ing  for  inventory.   If  you  want  to 
change  your  method  of  accounting  for      • Your home is your principal place          tions for Form 4562, Part VI.
                                              of business under section 280A(c)(1)(A) 
inventory,  file  Form  3115.  For  details,                                                At-risk loss deduction.      Any loss from 
                                              (for purposes of deducting expenses for 
see Line F, earlier.                                                                        this  business  that  was  not  allowed  last 
                                              business use of your home) and the            year because of the at-risk rules is trea-
        Certain  direct  and  indirect  ex-   travel is to another work location in the     ted as a deduction allocable to this busi-
!       penses may have to be capital-        same trade or business, regardless of         ness in 2024.
CAUTION ized  or  included  in  inventory.    whether that location is regular or 
                                                                                            Bad  debts.  Include  debts  and  partial 
See Part II, earlier. See Pub. 538 for ad-    temporary and regardless of distance.
                                                                                            debts from sales or services that were in-
ditional information.
                                                                                            cluded  in  income  and  are  definitely 
                                              Line 47                                       known to be worthless. If you later col-
Line 33                                       Specific  recordkeeping  rules  apply  to     lect  a  debt  that  you  deducted  as  a  bad 
Your  inventories  can  be  valued  at  cost, car  or  truck  expenses.  For  more  infor-  debt,  include  it  as  income  in  the  year 
the lower of cost or market, or any other     mation  about  what  records  you  must       collected.  For  details,  see Pub.  334, 
method approved by the IRS.                   keep, see Pub. 463.                           chapter 8.

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Business  startup  costs. If  your  busi-      If  you  have  an  applicable  financial     are required to give us the information. 
ness began in 2024, you can elect to de-       statement, you may use this safe harbor      We need it to ensure that you are com-
duct  up  to  $5,000  of  certain  business    to  deduct  amounts  paid  for  tangible     plying with these laws and to allow us to 
startup  costs.  The  $5,000  limit  is  re-   property  up  to  $5,000  per  item  or  in- figure  and  collect  the  right  amount  of 
duced  (but  not  below  zero)  by  the        voice. If you don't have an applicable fi-   tax.
amount by which your total startup costs       nancial  statement,  you  may  use  the  de  You  are  not  required  to  provide  the 
exceed $50,000. Your remaining startup         minimis  safe  harbor  to  deduct  amounts   information requested on a form that is 
costs  can  be  amortized  over  a             paid for tangible property up to $2,500      subject to the Paperwork Reduction Act 
180-month  period,  beginning  with  the       per item or invoice.                         unless  the  form  displays  a  valid  OMB 
month the business began.                      Only  deduct  these  amounts  as  other      control number. Books or records relat-
For  details,  see IRS.gov/Newsroom/           expenses.  Don't  include  these  amounts    ing to a form or its instructions must be 
Heres-how-businesses-can-deduct-               on any other line.                           retained  as  long  as  their  contents  may 
startup-costs-from-their-federal-taxes.        For  details  on  making  this  election     become material in the administration of 
For  amortization  that  begins  in  2024,     and requirements for using the de mini-      any Internal Revenue law. Generally, tax 
complete and attach Form 4562.                 mis  safe  harbor  for  tangible  property,  returns and return information are confi-
Deduction  for  removing  barriers  to         see chapter 8 of Pub. 334.                   dential, as required by section 6103.
individuals  with  disabilities  and  the      Film and television and live theatrical      The time needed to complete and file 
elderly. You may be able to deduct up          production expenses.   You can elect to      Schedule  C  (Form  1040)  will  vary  de-
to  $15,000  of  costs  paid  or  incurred  in deduct costs of certain qualified film and   pending  on  individual  circumstances. 
2024  to  remove  architectural  or  trans-    television  productions  or  qualified  live The estimated burden for individual tax-
portation  barriers  to  individuals  with     theatrical  productions.  See  section  181, payers filing this form is included in the 
disabilities  and  the  elderly.  However,     for details.                                 estimates  shown  in  the  instructions  for 
                                                                                            their  individual  income  tax  return.  The 
you  can’t  take  both  a  credit  (on  Form   Forestation  and  reforestation  costs. 
                                                                                            estimated burden for all other taxpayers 
8826) and a deduction for the same ex-         Reforestation costs are generally capital 
                                                                                            who  file  this  form  is  approved  under 
penditures.                                    expenditures.  However,  for  each  quali-
                                                                                            OMB control number 1545-1974 and is 
Nontaxable  Medicaid  waiver  pay-             fied timber property, you can elect to ex-
                                                                                            shown next.
ments. Include  the  nontaxable  amount        pense up to $10,000 ($5,000 if married 
of your Medicaid waiver payments. See          filing separately) of qualifying reforesta-  Recordkeeping . . . . . . . . .    3 hr., 36 min.
Medicaid waiver payments, earlier.             tion costs paid or incurred in 2024.         Learning about the law or the 
De  minimis  safe  harbor  for  tangible       You can elect to amortize the remain-        form . . . . . . . . . . . . . . . 1 hr., 19 min.
property. Generally,  you  must  capital-      ing costs over 84 months. For amortiza-      Preparing the form. . . . . . .    1 hr., 39 min.
ize  costs  to  acquire  or  produce  real  or tion  that  begins  in  2024,  complete  and Copying, assembling, and sending 
                                                                                            the form to the IRS  . . . . . .   34 min.
tangible personal property used in your        attach Form 4562.
trade  or  business,  such  as  buildings,     The amortization election and the ex-
equipment, or furniture. However, if you       pense election don’t apply to trusts. For    If you have comments concerning the 
elect to use the de minimis safe harbor        details  on  reforestation  expenses,  see   accuracy of these time estimates or sug-
for tangible property, you may deduct de       chapter 4 of Pub. 225.                       gestions  for  making  this  form  simpler, 
minimis amounts paid to acquire or pro-                                                     we  would  be  happy  to  hear  from  you. 
duce  certain  tangible  property  if  these   Paperwork Reduction Act Notice.      We 
                                                                                            See  the  instructions  for  the  tax  return 
amounts are deducted by you for finan-         ask  for  the  information  on  Schedule  C 
                                                                                            with which this form is filed.
cial  accounting  purposes  or  in  keeping    (Form  1040)  to  carry  out  the  Internal 
your books and records.                        Revenue laws of the United States. You 

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Principal Business or 
Professional Activity 
Codes
North American Industry                                     six-digit codes are based on the North American              estate agent). Now find the six-digit code assigned to 
Classification System (NAICS).                              Industry Classification System (NAICS).                      this activity (for example, 531210, the code for offices 
                                                                  Select the category that best describes your           of real estate agents and brokers) and enter it on 
These codes for the Principal Business or Professional      primary business activity (for example, Real Estate).        Schedule C, line B.
Activity classify sole proprietorships by the type of       Then select the activity that best identifies the principal        Note. If your principal source of income is from 
activity they are engaged in to facilitate the              source of your sales or receipts (for example, real          farming activities, you should file Schedule F.
administration of the Internal Revenue Code. These 
Accommodation, Food                            113000  Forestry & logging (including       238170 Siding contractors                621400   Outpatient care centers
Services, & Drinking Places                            forest nurseries & timber tracts)   238910 Site preparation contractors      621900   Other ambulatory health care 
                                               114210  Hunting & trapping                  238120 Structural steel & precast                 services (including ambulance 
Accommodation                                  Support Activities for Agriculture &               concrete construction                      services, blood, & organ banks)
721310   Rooming & boarding houses,            Forestry                                           contractors                       Hospitals
         dormitories, & workers' camps         115210  Support activities for animal       238340 Tile & terrazzo contractors       622000   Hospitals
721210   RV (recreational vehicle) parks               production (including farriers)     238290 Other building equipment          Nursing & Residential Care Facilities
         & recreational camps                  115110  Support activities for crop                contractors                       623000   Nursing & residential care 
721100   Traveler accommodation                        production (including cotton        238390 Other building finishing                   facilities
         (including hotels, motels, & bed              ginning, soil preparation,                 contractors                       Social Assistance
         & breakfast inns)                             planting, & cultivating)            238190 Other foundation, structure, &    624410   Childcare services
Food Services & Drinking Places                115310  Support activities for forestry            building exterior contractors     624200   Community food & housing, & 
722514   Cafeterias, grill buffets, &          Arts, Entertainment, &                      238990 All other specialty trade                  emergency & other relief 
         buffets                                                                                  contractors                                services
722410   Drinking places (alcoholic            Recreation
         beverages)                            Amusement, Gambling, & Recreation           Educational Services                     624100   Individual & family services
722511   Full-service restaurants              Industries                                  611000 Educational services (including   624310   Vocational rehabilitation 
722513   Limited-service restaurants           713100  Amusement parks & arcades                  schools, colleges, &                       services
722515   Snack & non-alcoholic beverage        713200  Gambling industries                        universities)                     Information
         bars                                  713900  Other amusement & recreation        Finance & Insurance                      Publishing Industries
722300   Special food services (including              services (including golf courses,   Credit Intermediation & Related          513000   Publishing industries
         food service contractors &                    skiing facilities, marinas, fitness Activities                               Broadcasting & Content Providers & 
         caterers)                                     centers, bowling centers, skating   522100 Depository credit intermediation  Telecommunications
                                                       rinks, miniature golf courses)
Administrative & Support and                   Museums, Historical Sites, & Similar               (including commercial banking,    516000   Broadcasting & content 
Waste Management &                             Institutions                                       savings institutions, & credit             providers
                                                                                                  unions)
Remediation Services                           712100  Museums, historical sites, &        522200 Nondepository credit              517000   Telecommunications (including 
Administrative & Support Services                      similar institutions                       intermediation (including sales            Wired, Wireless, Satellite, Cable 
561430   Business service centers              Performing Arts, Spectator Sports, &               financing & consumer lending)              & Other Program Distribution, 
                                                                                                                                             Resellers, Agents, Other 
         (including private mail centers       Related Industries                          522300 Activities related to credit               Telecommunications, & Internet 
         & copy shops)                         711410  Agents & managers for artists,             intermediation (including loan             service providers)
561740   Carpet & upholstery cleaning                  athletes, entertainers, & other            brokers)                          Data Processing, Web Search Portals, & 
         services                                      public figures                      Insurance Agents, Brokers, & Related     Other Information Services
561440   Collection agencies                   711510  Independent artists, writers, &     Activities                               518210   Computing infrastructure 
561450   Credit bureaus                                performers                          524210 Insurance agencies &                       providers, data processing, web 
561410   Document preparation services         711100  Performing arts companies                  brokerages                                 hosting, & related services
561300   Employment services                   711300  Promoters of performing arts,       524290 Other insurance related           519200   Web search portals, libraries, 
                                                       sports, & similar events                   activities                                 archives, & other info. services
561710   Exterminating & pest control          711210  Spectator sports (including         Securities, Commodity Contracts, &       Motion Picture & Sound Recording
         services                                      professional sports clubs &         Other Financial Investments & Related    512100   Motion picture & video 
561210   Facilities support (management)               racetrack operations)               Activities                                        industries (except video rental)
         services                              Construction of Buildings                   523160 Commodity contracts               512200   Sound recording industries
561600   Investigation & security services                                                        intermediation
561720   Janitorial services                   236200  Nonresidential building             523150 Investment banking & securities   Manufacturing
                                                       construction
561730   Landscaping services                  236100  Residential building                       intermediation                    315000   Apparel mfg.
561110   Office administrative services                construction                        523210 Securities & commodity            312000   Beverage & tobacco product 
561420   Telephone call centers                Heavy and Civil Engineering                        exchanges                                  mfg.
         (including telephone answering        Construction                                523900 Other financial investment        334000   Computer & electronic product 
         services & telemarketing              237310  Highway, street, & bridge                  activities (including investment           mfg.
         bureaus)                                      construction                               advice)                           335000   Electrical equipment, appliance, 
561500   Travel arrangement &                  237210  Land subdivision                    Health Care & Social Assistance                   & component mfg.
         reservation services                                                              Ambulatory Health Care Services          332000   Fabricated metal product mfg.
561490   Other business support services       237100  Utility system construction
         (including repossession services,  237990     Other heavy & civil engineering     621610 Home health care services         337000   Furniture & related product mfg.
         court reporting, & stenotype                  construction                        621510 Medical & diagnostic              333000   Machinery mfg.
         services)                             Specialty Trade Contractors                        laboratories                      339110   Medical equipment & supplies 
561790   Other services to buildings &         238310  Drywall & insulation                621310 Offices of chiropractors                   mfg.
         dwellings                                     contractors                         621210 Offices of dentists               322000   Paper mfg.
561900   Other support services                238210  Electrical contractors              621330 Offices of mental health          324100   Petroleum & coal products mfg.
         (including packaging & labeling       238350  Finish carpentry contractors               practitioners (except physicians) 326000   Plastics & rubber products mfg.
         services, & convention & trade        238330  Flooring contractors                621320 Offices of optometrists           331000   Primary metal mfg.
         show organizers)                                                                  621340 Offices of physical,              323100   Printing & related support 
Waste Management & Remediation                 238130  Framing carpentry contractors
Services                                       238150  Glass & glazing contractors                occupational & speech                      activities
                                                                                                  therapists, & audiologists        313000   Textile mills
562000   Waste management &                    238140  Masonry contractors                 621111 Offices of physicians (except     314000   Textile product mills
         remediation services                  238320  Painting & wall covering                   mental health specialists)        336000   Transportation equipment mfg.
Agriculture, Forestry, Hunting, &                      contractors                         621112 Offices of physicians, mental     321000   Wood product mfg.
Fishing                                        238220  Plumbing, heating & air-                   health specialists
                                                       conditioning contractors            621391 Offices of podiatrists            339900   Other miscellaneous mfg.
112900   Animal production (including          238110  Poured concrete foundation &        621399 Offices of all other              Chemical Manufacturing
         breeding of cats and dogs)                    structure contractors                      miscellaneous health              325100   Basic chemical mfg.
114110   Fishing                               238160  Roofing contractors                        practitioners

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