Guide
Schedule C expenses, line by line
Schedule C is where a sole proprietor's business expenses actually land, and its Part II line list is the most useful category set available to anyone keeping their own records — because it is the one your figures have to fit into anyway. Building your categories to match it means year end is a copy, not a translation.
Scope and source
The line numbers and labels below were transcribed from the 2025 Schedule C (Form 1040) itself on 16 August 2026, not from a summary. Lines are renumbered between years occasionally, so check the form for the year you are filing. This is US federal only and it is not tax advice.
Worth saying why the source matters here: a fetch of the instructions page while writing this returned a mis-numbered list that put car and truck expenses on line 8 and office expense on line 18. Both are wrong. If a page you are reading gets the line numbers wrong, it was not written from the form.
Part II, in order
8 Advertising. 9 Car and truck expenses. 10 Commissions and fees. 11 Contract labor. 12 Depletion. 13 Depreciation and section 179 expense deduction. 14 Employee benefit programs. 15 Insurance (other than health). 16a Mortgage interest paid to banks. 16b Other interest. 17 Legal and professional services. 18 Office expense. 19 Pension and profit-sharing plans. 20a Rent or lease of vehicles, machinery and equipment. 20b Rent or lease of other business property. 21 Repairs and maintenance. 22 Supplies. 23 Taxes and licenses. 24a Travel. 24b Deductible meals. 25 Utilities. 26 Wages. 27a Energy efficient commercial buildings deduction. 27b Other expenses.
Line 28 totals them, line 29 gives tentative profit, line 30 is the home office deduction — Form 8829, or the simplified method entered directly on the form — and line 31 is net profit, which carries to Schedule 1 and to Schedule SE. Cost of goods sold is not in Part II at all: it is Part III, arriving at line 4 via line 42. Anything on line 27b is itemised in Part V and totals at line 48.
The lines people put things on wrongly
Four recurring mistakes: putting materials that belong in cost of goods sold into Supplies; splitting one subscription across Office expense and Other; putting contractor payments into Wages, which is for employees; and putting anything that should be depreciated into Repairs.
The wages-versus-contract-labor confusion is the consequential one, because the two have completely different reporting obligations attached. Line 26 is employees with payroll behind it; line 11 is contract labor, which is where payments to freelancers and subcontractors go, and which is tied to the 1099 questions at the top of the form. If you are unsure which one a person is, that is a classification question worth getting right before it becomes a payroll problem.
Map your own categories to these lines once
Take your existing category list, write the Schedule C line next to each, and merge anything that maps to the same line. If two of your categories both land on line 18, they are one category with a description field. That exercise usually cuts a fifteen-category set down to seven or eight.
It also surfaces the categories that map to nothing, which are the ones worth a conversation: personal draws, loan repayments and estimated tax payments are not expenses, and if they are in your expense list your profit figure is wrong. This is the single most common bookkeeping error in a first year of self-employment.
Line 27b is not a filing cabinet
Other expenses exists for genuine costs with no home elsewhere on the form — and it is itemised in Part V, so anything you put there has to be named anyway. Using it as a default for whatever you could not classify produces a large unexplained figure, which is the opposite of what good records look like.
A useful discipline: if Other is one of your three biggest lines, something is being misfiled. Go back through it and place each item properly. Most of what lands there belongs on Office expense, Supplies, or Legal and professional services.
What the form does not ask for, and you still need
Schedule C wants totals. Every total has to be supported by the underlying records — the receipts, invoices, statements and logs behind it — and none of that is submitted with the form. The number is what you file; the evidence is what you keep.
That is the whole reason a category system matters during the year rather than in April. A total you can trace to individual records is defensible; the same total reconstructed from a bank feed in one afternoon is a figure you are hoping nobody questions. Travel, meals and vehicle use are the lines where that difference bites hardest, because estimation is barred for them.
Where a receipt tool fits
It fills the gap between a pile of slips and these line totals. Our AI Receipt Scanner extracts each receipt into an editable, categorised record and exports the set as Excel, CSV or PDF — entering and organising free, export behind Pro. It is not tax software and it does not produce a Schedule C.
The honest description is that it produces the input to whoever does. If your accountant wants a categorised spreadsheet with images behind it, that is a thing to hand over. If you prefer to keep the whole thing in a spreadsheet yourself, the free template on this site uses a column layout that maps to these lines cleanly.
Questions
Common questions
What expenses go on Schedule C?
Part II lists them: advertising, car and truck, commissions and fees, contract labor, depletion, depreciation and section 179, employee benefit programs, insurance, mortgage and other interest, legal and professional services, office expense, pension plans, rent or lease of vehicles and of property, repairs, supplies, taxes and licences, travel, deductible meals, utilities, wages, the energy efficient commercial buildings deduction, and other expenses.
Where does cost of goods sold go on Schedule C?
Not in Part II. Cost of goods sold is calculated in Part III and carried to line 4, so materials that form part of what you sell should not also appear under Supplies in Part II.
What is the difference between wages and contract labor?
Wages, line 26, is for employees, with payroll obligations attached. Contract labor, line 11, is for payments to freelancers and subcontractors and connects to the 1099 questions at the top of the form. Misclassifying one as the other is a reporting problem rather than a bookkeeping one.
Where does the home office deduction go?
Line 30, after the Part II totals — either from Form 8829 or using the simplified method, which is entered on the form itself using the square footage of your home and of the business-use area.
What belongs in Other expenses?
Genuine business costs with no other line on the form, itemised in Part V. If Other is among your largest lines, something is being misfiled — most of what ends up there belongs under Office expense, Supplies or Legal and professional services.
Should I use the Schedule C lines as my own expense categories?
Yes, for most sole proprietors. They are the buckets your figures must land in anyway, so matching them removes the year-end translation step and usually shrinks an over-specified category list at the same time.