Internal Revenue Service United States Department of the Treasury
Level Basic Advanced Military International

Income — Business; Form 1040, Line 12 Workout

Summary and Exercises


Take a moment to review what you have covered in this lesson:

  • Business income or loss is generally beyond the scope of VITA or TCE. However, in some cases, you may help self-employed taxpayers who qualify to use Schedule C-EZ or limited Schedule C.
  • Qualified Medicaid waiver payments are treated as difficulty of care payments and are excludable from gross income.
  • Where to get business income and expense information.
  • Cash income must be reported.
  • Additional inquiries about the taxpayer's income and expenses may be necessary to ensure an accurate return.
  • Certain situations involving Schedule C and EIC should raise "red flags."
  • Who can use Schedule C-EZ.
  • Taxpayers with net self-employment income of $400 or more must complete Schedule SE to compute self-employment tax.
  • How to determine what records to maintain.
  • How to complete simple record reconstruction.