Subtitles section Play video Print subtitles Hello, I'm Jill from Turbo Tax with some important information for self-employed taxpayers. Preparing your tax return when reporting self- employment earnings can be a little more complex than when your income is from employment. This is because of the Schedule C form you must prepare when your net profit is $400 or more. However, if you are eligible to file the shorter Schedule C-EZ, you may just save some time preparing your taxes. Schedules C and C-EZ are used to report the income and expenses that relate solely to your self-employment activities. However, you must also report the net profit or loss in the income section of your 1040 form. But before evaluating whether you are eligible to use the shorter Schedule C-EZ, you need to insure that you are in fact self employed. You are self-employed if you operate a business as a sole proprietor, including a limited liability company you are the sole member of. You are also self-employed if you earn income as an independent contractor. When preparing a Schedule C, you must report your business expenses in the appropriate categories listed on the form, such as advertising, and insurance and rent expenses, to name just a few. The Schedule C-EZ, however, is simpler to prepare since it allows you to report business expenses on one line instead of having to account for them by category. But in order to use the Schedule C-EZ, you must satisfy a number of requirements first. If you fail to satisfy even one—you must use the full Schedule C. You can use Schedule C-EZ if your total business expenses don't exceed $5,000, you use the cash method of accounting, your business or profession doesn't require inventory, you aren't reporting a loss, you operate only one business, you don't receive certain credit card payments, the business has no employees, you don't claim the home office deduction and you satisfy the requirements of other less common situations that relate to depreciation and losses from prior years. One thing to remember is that you must make this evaluation each tax year— eligibility to use the Schedule C-EZ one year doesn't mean you can use it in all future tax years. Not sure which form to use? When you file with TurboTax, you don't need to know a thing about tax forms. We'll ask you simple questions and determine the filing status and forms that will give you your biggest tax refund. For more information about this and other tax topics, visit TurboTax.com.