Self-Employment Income

Net earnings from self-employment are considered earned income. This includes all income, even pay for side jobs or contract labor, even when taxpayers do not think of themselves as self-employed. Report all self-employment income on Schedule C-EZ, Net Profit from Business, or Schedule C, Profit or Loss from Business. Taxpayers with a reason to file Schedules C and C-EZ should seek the assistance of a professional tax preparer.

Include all allowable expenses when completing Schedules C and C-EZ.

For most taxpayers who are within the scope of the volunteer program, net earnings for EIC purposes will be the amount reported on line 12 of Form 1040, minus the deductible portion of the self-employment tax reported in the Adjusted Gross Income section of the tax return.

Jeff's self-employment income reported on Form 1040, line 12 is $2,000. The deduction for the deductible portion of his self-employment tax, which is recorded in the adjustments section of Form 1040, is $141. Jeff's income, for EIC purposes, is $2000-$141=$1859.