Most US freelancers and sole proprietors report profit or loss from their business on Schedule C (Form 1040). Part I is income (gross receipts, returns, cost of goods sold). Part II is expenses. The line names below are taken from the 2026 Schedule C. Use the current form and instructions at IRS.gov when you file; draft or prior-year versions can differ.
Official Part II expense lines (2026 Schedule C)
| Line (2026 form) | Official category | Everyday examples (not a deduction promise) |
|---|---|---|
| 8 | Advertising | A directory listing, printed flyers, online ads for the business |
| 9 | Car and truck expenses | Standard mileage or actual vehicle costs; see the mileage guide |
| 10 | Commissions and fees | A sales commission you paid, a platform fee that belongs here rather than elsewhere |
| 11 | Contract labor | Amounts paid to subcontractors (you may also have 1099 filing duties as a payer) |
| 12 | Depletion | Uncommon for most freelancers; see the instructions |
| 13 | Depreciation and section 179 | Equipment you capitalize rather than expense in full; often needs Form 4562 |
| 14 | Employee benefit programs | Only if you have employees and qualifying benefits (not the same as your own health insurance, which has special rules) |
| 15 | Insurance (other than health) | Business liability or professional liability insurance |
| 16 | Interest | Business loan or business-use mortgage interest, split as the form requires |
| 18 | Office expense | Ordinary office supplies and postage; see the instructions for what belongs here versus supplies or equipment |
| 19 | Pension and profit-sharing plans | Qualified plan contributions for employees, as the instructions allow |
| 20a / 20b | Rent or lease | Vehicles, machinery, or equipment (20a); other business property such as a studio (20b) |
| 21 | Repairs and maintenance | Repairs to business property, as distinguished from improvements you must capitalize |
| 22 | Supplies | Consumable materials not included in cost of goods sold |
| 23 | Taxes and licenses | Business licenses and certain business taxes; see the instructions (personal income tax is not a Schedule C expense) |
| 24a / 24b | Travel and deductible meals | Business travel, and meals to the extent the law allows (meal deductibility is limited) |
| 25 | Utilities | Utilities for business property (home utilities usually go through the home-office computation) |
| 26 | Wages | Wages paid to employees, less employment credits |
| 27 and Part V | Other lines and other expenses | Items the form directs you to list separately, including other expenses in Part V |
| 30 | Business use of your home | Enter only here, using Form 8829 or the simplified method — not also on the utility or rent lines |
Line 17 and other lettered sub-lines appear on the official form; always read the line instructions rather than forcing a receipt into the wrong bucket. Cost of goods sold, if it applies to you, is computed in Part III and flows to Part I, not as a miscellaneous Part II expense.
A simple habit that makes tax season quieter
- Invoice your income in one placeFjordbill keeps the paid invoices that become gross receipts. See 1099 invoice records.
- Photograph receipts when you still have themSovereignLedger is a receipt scanner for this: merchant, date, amount, and a category you can later map toward Schedule C. It does not decide deductibility for you.
- Log miles the same dayDate, destination, business purpose, and miles. Official 2026 rates are on the mileage page.
- Export a package for your CPAA CSV and a receipt folder beat a bag of paper. SovereignLedger can estimate Schedule C totals; your tax pro still prepares the return.
Read the IRS instructions for the year you are filing, and Publication 535 (Business Expenses) or Publication 334 (Tax Guide for Small Business) for general rules. If something is unclear — meals, a mixed-use phone, a home office, a large equipment purchase — stop and ask a professional instead of guessing in a category map.
Schedule C profit is also what drives self-employment tax and your quarterly estimated payments. If you fell behind on those this year, read missed a quarterly estimated tax payment? How to catch up for 2026.
Sources
- IRS, About Schedule C (Form 1040), Profit or Loss from Business
- IRS, 2026 Schedule C (Form 1040)
- IRS, Instructions for Schedule C (read the edition for the year you file)
- IRS Publication 535, Business Expenses
- IRS Publication 334, Tax Guide for Small Business
- IRS Topic no. 305, Recordkeeping
Reviewed 12 November 2026. Links go to the official or cited source; check the live page if a figure may have been updated since.
Frequently asked questions
Is this tax advice?
No. It is a map of official Schedule C expense line names and general IRS recordkeeping pointers, with links to the form and instructions. Whether an amount is deductible for you is a question for a qualified tax professional.
Does SovereignLedger file Schedule C?
No. SovereignLedger can estimate Schedule C figures from the receipts, mileage, and income you record. It does not file a tax return and is not a substitute for a CPA.
Where do home-office expenses go?
On the official Schedule C, expenses for business use of your home are entered on line 30, not mixed into the other Part II lines. You generally use Form 8829 or the simplified method in the instructions.
Can I deduct every receipt I scan?
No. A receipt is evidence. The amount still has to be an ordinary and necessary business expense under the tax law, and some costs are limited or disallowed. That is why the disclaimer is on this page.