Instructions For Schedule C 1040 - 2016 (Page 8 of 18) in pdf

include expenses incurred in resolving

if you leased a vehicle for a term of 30

Social security and Medicare taxes

asserted tax deficiencies related to your

days or more, you may have to reduce

paid to match required withholding from

business.

your deduction by an amount called the

your employees' wages. Reduce your de-

inclusion amount. See Leasing a Car in

duction by the amount shown on Form

For more information, see Pub. 334

chapter 4 of Pub. 463 to figure this

8846, line 4.

or 535.

amount.

Federal unemployment tax paid.

Federal highway use tax.

Line 18

Enter on line 20b amounts paid to

Contributions to state unemploy-

rent or lease other property, such as of-

Include on this line your expenses for

ment insurance fund or disability benefit

fice space in a building.

office supplies and postage.

fund if they are considered taxes under

state law.

Line 21

Line 19

Do not deduct the following.

Deduct the cost of incidental repairs and

Federal income taxes, including

Enter your deduction for the contribu-

maintenance that do not add to the prop-

your self-employment tax. However,

tions you made for the benefit of your

erty's value or appreciably prolong its

you can deduct one-half of your self-em-

employees to a pension, profit-sharing,

life. Do not deduct the value of your

or annuity plan (including SEP, SIM-

ployment tax on Form 1040, line 27 (or

own labor. Do not deduct amounts spent

PLE, and SARSEP plans described in

Form 1040NR, line 27, when covered

to restore or replace property; they must

under the U.S. social security system

Pub. 560). If the plan included you as a

be capitalized.

due to an international social security

self-employed person, enter the contri-

agreement).

butions made as an employer on your

Line 22

Estate and gift taxes.

behalf on Form 1040, line 28, or Form

1040NR, line 28, not on Schedule C.

Taxes assessed to pay for improve-

In most cases, you can deduct the cost of

ments, such as paving and sewers.

materials and supplies only to the extent

This deduction may be subject to lim-

Taxes on your home or personal

you actually consumed and used them in

itations. For more information on poten-

use property.

your business during the tax year (unless

tial limitations, see Pub. 560.

State and local sales taxes on prop-

you deducted them in a prior tax year).

In most cases, you must file the ap-

erty purchased for use in your business.

However, if you had incidental materials

plicable form listed below if you main-

Instead, treat these taxes as part of the

and supplies on hand for which you kept

tain a pension, profit-sharing, or other

cost of the property.

no inventories or records of use, you can

funded-deferred compensation plan. The

State and local sales taxes imposed

deduct the cost of those you actually

filing requirement is not affected by

on the buyer that you were required to

purchased during the tax year, provided

whether or not the plan qualified under

collect and pay over to state or local

that method clearly reflects income.

the Internal Revenue Code, or whether

governments. These taxes are not inclu-

You can also deduct the cost of

or not you claim a deduction for the cur-

ded in gross receipts or sales nor are

books, professional instruments, equip-

rent tax year. There is a penalty for fail-

they a deductible expense. However, if

ment, etc., if you normally use them

ure to timely file these forms.

the state or local government allowed

within a year. However, if their useful-

you to retain any part of the sales tax

Form 5500-EZ. File this form if you

ness extends substantially beyond a

you collected, you must include that

have a one-participant retirement plan

year, you must generally recover their

amount as income on line 6.

that meets certain requirements. A

costs through depreciation.

Other taxes and license fees not re-

one-participant plan is a plan that covers

lated to your business.

only you (or you and your spouse).

Line 23

Form 5500-SF. File this form electron-

Line 24a

You can deduct the following taxes and

ically with the Department of Labor (at

licenses on this line.

) if you have a small

Enter your expenses for lodging and

State and local sales taxes imposed

plan (fewer than 100 participants in

transportation connected with overnight

on you as the seller of goods or services.

most cases) that meets certain require-

travel for business while away from

If you collected this tax from the buyer,

ments.

your tax home. In most cases, your tax

you must also include the amount col-

home is your main place of business, re-

Form 5500. File this form electronical-

lected in gross receipts or sales on

gardless of where you maintain your

ly with the Department of Labor (at

line 1.

family home. You cannot deduct expen-

) for a plan that does

Real estate and personal property

ses paid or incurred in connection with

not meet the requirements for filing

taxes on business assets.

employment away from home if that pe-

Form 5500-EZ or Form 5500-SF.

Licenses and regulatory fees for

riod of employment exceeds 1 year. Al-

For details, see Pub. 560.

your trade or business paid each year to

so, you cannot deduct travel expenses

state or local governments. But some li-

for your spouse, your dependent, or any

Lines 20a and 20b

censes, such as liquor licenses, may

other individual unless that person is

have to be amortized. See chapter 8 of

your employee, the travel is for a bona

If you rented or leased vehicles, machi-

Pub. 535 for details.

fide business purpose, and the expenses

nery, or equipment, enter on line 20a the

business portion of your rental cost. But

C-8

Instructions For Schedule C 1040 - 2016 Page 8

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