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Author: AHOLLYS Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121114  
Subject: TODAY'S TIP: SELF-EMPLOYED INCOME Date: 4/12/2001 9:08 PM
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TODAY'S TIP: SELF-EMPLOYED INCOME

Gracie writes, "In order to earn a little extra money I do surf the
Web and click for pennies on the Internet... I was wondering if I
should report that on Schedule C, so I could write off the expense of
the Internet?"

In this situation, Gracie is considered a sole proprietor and has
self-employment income. We'll cover the basics of filing as a sole
proprietor in the next two tips.

You are a sole proprietor if you are the sole owner of a business that
is not a corporation or partnership. Report your income and expenses
from your sole proprietorship on Schedule C Form 1040, Profit or Loss
From Business, or on Schedule C-EZ Form 1040, Net Profit From
Business.

You may use Schedule C-EZ to determine your net profit if you have
only one sole proprietorship and you meet all the requirements listed
in Part 1 of Schedule C-EZ. If you can use Schedule C-EZ, gross
receipts from your business and total expenses are reported in Part
II. The difference between gross receipts and total expenses you
reported is your net profit. Report Net profit on line 12 of your Form
1040.

You cannot use Schedule C-EZ if your business expenses were more than
$2,500, your business used the accrual method of accounting, you
deducted expenses for the business use of your home, or if you had
employees, a net loss, or inventory.

If you cannot use Schedule C-EZ, you must report your business income
and expenses on Schedule C. And, if you have more than one sole
proprietorship business, or if you and your spouse have separate
businesses, you must use a separate Schedule C for each business.


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