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Medical Transcription Work and Schedule C Tax Forms

Taxpayers who earn self-employment income, such as from medical transcription, report it on Schedule C, Profit or Loss from a Business. It’s a two-page form. The first page contains the meat, including your bottom line: net profit. The second page contains additional sections that are only relevant to some situations. Here’s how the form breaks down:

  • Part I: Income: Business income you receive, before deducting anything, whether it’s reported on a 1099 or not.

  • Part II: Expenses: Business expenses except for those that fall under business use of your home (the official name for the home office deduction). Some categories of expenses are specifically listed, such as:

    • Car and truck expenses (based on your mileage log)

    • Legal and professional services (like accountant fees)

    • Office expenses (office supplies and postage)

    • Travel, meals, and entertainment expenses

    • Contract labor (the amount you paid any ICs who did work for you)

    • Other expenses (total amount of business expenses not specifically listed; you list them yourself in Part V of the form)

The fact that an expense isn’t present as a line item on Schedule C doesn’t mean that you aren’t allowed to deduct it — it just means the IRS isn’t reminding you to do so. That’s what the “Other expenses” category is for — don’t be afraid to use it!

The second page of Schedule C includes three additional sections:

  • Part III: Cost of Goods Sold: You won’t use this. It’s only used by businesses that sell physical goods.

  • Part IV: Information on Your Vehicle: Details about your vehicle use that support the “Car and truck expenses” you entered in Part II.

  • Part V: Other Expenses: This where you itemize business expenses that the IRS isn’t reminding you to deduct. The total carries to the “Other expenses” slot in Part I.

It’s important to become familiar with Schedule C and stay up on the latest tax deductions related to self-employment. Read the instructions publication that accompanies Schedule C.

You also may end up completing additional forms to support specific deductions. To calculate the amount you can deduct for a home office, for example, you’ll complete IRS Form 8829: Expenses for Business Use of Your Home.

Don’t let talk about all these IRS forms intimidate you; any tax program or tax preparer can walk you through finding the right ones and filling them out. Go to the IRS website for the latest forms and the tedious but crucial instructions that go with them. You also can call the IRS (800-TAX-FORM or 800-829-3676) and have forms and publications mailed to you for free.

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