The IRS provides a simplified version of Schedule C, called Schedule C-EZ, Net Profit From Business, that can be used by some sole proprietors, primarily those who work as independent contractors for one or more larger businesses.
Whenever you have an option as to which tax form to use, it's generally best to use the simplest form that's available to you, provided that you don't miss out on deductions or credits by doing so.
So, you'll want to use Schedule C-EZ if you're eligible. You are eligible to use Schedule C-EZ if you:
- operated only one business as a sole proprietorship, statutory employee or qualified joint venture during the year
- did not have an inventory at any time during the year
- did not have any employees during the year
- had total business expenses that did not exceed $5,000
- do not deduct expenses for business use of your home
- use the cash method of accounting
- did not have a net loss
- do not have any prior-year unallowed passive activity losses for this business
- are not required to file a Form 4562, Depreciation and Amortization, for the year, which means that you did not place any depreciable property into service for the first time this year, and you're not claiming depreciation on any "listed property" such as a car, light truck, motorcycle, computer or peripherals, or photographic, audio/video, or communications equipment
If you do not meet all of these requirements, you must file Schedule C this year instead of C-EZ.