ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Should You Use Schedule C or Schedule K-1 on Your Individual Tax Return?

Updated on February 27, 2018
the girls profile image

I am a Certified Public Accountant with an MBA in Finance. I am also a freelance writer.

It's tax time again! You will file your personal income tax return on April 15th or the "next business day" if it falls on a weekend or holiday. What income do you need to file on April 15th? It is all the money you earned the year before.

There are several tax forms that you need to fill out. The IRS has many tax forms, which have different uses and distinct purposes. Two of them are Schedule C and Schedule K-1. These forms have specific purposes and classifications. You have to choose correctly which form you need to prepare.

What Is a Schedule C?

Many individuals are small business owners or single proprietor. The business is usually managed by the proprietor, and the business structure is not as complex as a partnership or corporation.

The IR made it easier for small businesses to file its income and expenses during the tax year by using Schedule C. The Schedule C can be found on your personal income tax return (1040).

The Schedule C is the complete information you will provide to IRS as to how much your business has earned during the year (gross amount). You will also itemize your business expenses, backed with receipts. If there is profit left (net gain or net revenue), it will be added to the rest of your income from other sources during the year.

Your net income from Schedule C is subject to Self-Employment tax. Self-Employment tax is paying your own Social Security and Medicare contribution for both the employee's and the employer's share. In this case, since you are considered as an employer to yourself, 50% of your self-employment tax becomes deductible on your personal income tax return.

Example 1: I earn money on the side from writing on Hubpages. Since a freelance writer is considered as self-employment, I will use Schedule C when I file my income tax return for the earnings from Hubpages.

Example 2: I sell merchandise to the public. I didn't register my business as a partnership or corporation. Therefore, I will use Schedule C when I file my income tax return.

Example 3: I teach piano lessons or Taekwondo on weekends. All the income I received will be on Schedule C.

What Is a Schedule K-1?

A schedule K-1 is used when you are part owner of a Partnership or S-Corporation. The legal structure of a partnership and S-Corporation is usually owned by two or more persons. There are certain exceptions by owning it 100% yourself. The form Schedule K-1 is the "proof" of your income, expenses or losses from your partnership or S-Corporation business.

Schedule K-1 is also called a "pass-through." It means that all the income from your Partnership or S-corporation earned during the year, whether you took money from those earnings or not, will be taxed on your personal return (1040). It is also the same with the business losses.

By the looks of it, being a partner in a partnership or a stockholder in an S-Corporation, you are really taxed personally on your individual income tax return.

As a taxpayer, you need to know what the basic tax laws are and the correct forms to use in order to file your tax return properly.

It is best to consult with your Certified Public Accountant (CPA), Enrolled Agent (EA) or an IRS-certified Tax Preparer if you are not sure how to prepare your Income Tax Return correctly.

© 2012 Theresa Ventu


    0 of 8192 characters used
    Post Comment
    • profile image


      5 years ago

      Thank you for such a great info. I was able to come across this online service that allows you to easily edit your PDF documents. ( You can fill out PDF form, save it, fax it, and email it. You might want to try, it was good!

    • AudreyHowitt profile image

      Audrey Howitt 

      6 years ago from California

      Useful hub!!

    • teaches12345 profile image

      Dianna Mendez 

      7 years ago

      Thanks for the information. I am going to have to look into this when we file our taxes.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)
    ClickscoThis is a data management platform studying reader behavior (Privacy Policy)