Tax Year 2025

What does Schedule C actually tax?

Your actual return

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Calculating…

If you're a freelancer, contractor, or sole proprietor, Schedule C is where your business income and expenses get reported on your personal tax return. Unlike a W-2 job, nobody withholds tax from your business income for you — and unlike an employee, you get to deduct your actual business costs before you're taxed on what's left. The single biggest mistake self-employed filers make isn't claiming too many deductions — it's claiming too few, because they don't track expenses through the year and forget them at tax time.

What you report

Schedule C starts with your gross receipts (Line 1: Total gross receipts), subtracts your deductible business expenses - advertising, supplies, a home office, vehicle costs, insurance, contract labor, and more - (Line 28: Total Expenses), and the result is your net profit or loss (Line 31: Net Profit (Loss)), which flows to your personal return and to Schedule SE.

A real example

Gross receipts	Expenses claimed	Net profit	Self-employment tax owed
$90,000	$35,000	$55,000	$7,771

Self-employment tax is 15.3% of 92.35% of net profit (the employer + employee shares combined) - see the Schedule SE page for exactly how that's figured.