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This lesson is designed to teach tax preparers how to report business income, including self-employment income for taxpayers who are eligible to file Schedule C-EZ. Form 1040, line 12, is used to report income from a business or profession operated as a sole proprietor or independent contractor.

Preparation of tax returns with Schedule C are in scope for VITA/TCE under certain limited conditions and with expenses of $10,000 or less.

Form 1099-K, Merchant and Third Party Payments, is new for 2011 and will be covered in this lesson.

This lesson also covers recordkeeping requirements for taxpayers with business income and expenses.