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Pennsylvania Free Printable PA Schedule C - Profit or Loss from Business or Profession (Sole Proprietorship) (PA-40 C) for 2020 Pennsylvania PA Schedule C - Profit or Loss From Business or Profession

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PA Schedule C - Profit or Loss From Business or Profession
PA Schedule C - Profit or Loss from Business or Profession (Sole Proprietorship) (PA-40 C)

START HERE ➜ Profit or Loss from Business or Profession (Sole Proprietorship) PA-40 C (EX) 05-19 (FI) PA Department of Revenue 20___ 1903110052 Include with Form PA-40 or PA-41 Name of owner as shown on PA tax return: OFFICIAL USE ONLY Owner’s Social Security number t t PA SCHEDULE C Product or service C. Federal Employer Identification Number t A. Main business activity B. Business name D. Business address (number and street) City, State and ZIP Code E. Method(s) used to value closing inventory. Fill in the appropriate oval: (1) Cost (2) Lower of cost or market (3) Other (if other, attach explanation) t C Sales Tax License Number (if applicable) F. Accounting method. Fill in the appropriate oval: (1) Cash (2) Accrual (3) Other (specify) . . . . . . . . . . . . . . . . . . . . . . Yes No G. Was there any change in determining quantities, costs, or valuations . . . . . . . . . . . . . . . . . . between opening and closing inventory? If “Yes,” submit explanation. t Federal NAICS Code H. Did you deduct expenses for an office in your home? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I. If the business is out of existence, fill in this oval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SECTION I INCOME 1. a. Gross receipts or sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1a. b. Returns and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1b. 1c. 2. 3. Gross profit (subtract Line 2 from Line 1c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. Other Income (submit statement). Include interest from accounts receivable, business checking accounts and other business accounts. Also include sales of operational assets. . . . . . . . . . . . . . . . . 5. Total income (add Lines 3 and 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. t c. Balance (subtract Line 1b from Line 1a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. Cost of goods sold and/or operations (Schedule C-1, Line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . SECTION II 4. 5. DEDUCTIONS 6. Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . 28. Supplies (not included on Schedule C-1) . . . . 7. Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . 29. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Bad debts from sales or services . . . . . . . . . . 30. Telephone . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9. Bank charges . . . . . . . . . . . . . . . . . . . . . . . . . 31. Travel and entertainment . . . . . . . . . . . . . . . . 10. Car and truck expenses . . . . . . . . . . . . . . . . . 32. Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . 33. Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12. Cost depletion but not percentage depletion . 34. IDCs (1/3 current expensing) . . . . . . . . . . . . . 13. a. Regular depreciation . . . . . . . . . . . . . . . 35. IDCs (amortization) . . . . . . . . . . . . . . . . . . . . . 13. b. Section 179 expense . . . . . . . . . . . . . . . 36. Start-up costs (direct expense) . . . . . . . . . . . . 14. Dues and publications . . . . . . . . . . . . . . . . . . . 37. Other expenses (specify): 15. Employee benefit programs other than on Line 23 a. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16. Freight (not included on Schedule C-1) . . . . . b. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . c. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18. Interest on business indebtedness . . . . . . . . . d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19. Laundry and cleaning . . . . . . . . . . . . . . . . . . . e. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20. Legal and professional services . . . . . . . . . . . f. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21. Management fees . . . . . . . . . . . . . . . . . . . . . . g. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22. Office supplies . . . . . . . . . . . . . . . . . . . . . . . . h. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23. Pension and profit-sharing plans for employees i. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24. Postage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25. Rent on business property . . . . . . . . . . . . . . . 26. Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . j. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37. Total other expenses . . . . . . . . . . . . . . . . . . . . 38. Total expenses. (add Lines 6 through 37) . . . . 27. Subcontractor fees . . . . . . . . . . . . . . . . . . . . . 39. Net profit or loss (subtract Line 38 from Line 5). If a net loss, fill in the oval. Enter the result on your PA tax return. . . . .Loss 39. SIDE 1 1903110052 Reset Entire Form TOP OF PAGE 1903110052 NEXT PAGE PRINT 1903210050 PA SCHEDULE C Profit or Loss from Business or Profession (Sole Proprietorship) PA-40 C (EX) 05-19 (FI) PA Department of Revenue START 20___ OFFICIAL USE ONLY Social Security Number Name of owner as shown on PA tax return: ➜ SCHEDULE C-1 - Cost of Goods Sold and/or Operations 1. Inventory at beginning of year (if different from last year’s closing inventory, include explanation) . . . . 2. a. Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a. b. Cost of items withdrawn for personal use . . . . . . . . . . . 2b. 1. c. Balance (subtract Line 2b from Line 2a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2c. 3. 4. Materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4. 5. Other costs (include schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5. 6. Add Lines 1, 2c, 3, 4 and 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Inventory at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8. Cost of goods sold and/or operations (subtract Line 7 from Line 6) Enter here and on Section I, Line 2 . 7. t 3. Cost of labor (do not include salary paid to yourself or subcontractor fees) . . . . . . . . . . . . . . . . 8. SCHEDULE C- 2 - Depreciation 3. Balance (subtract Line 2 from Line 1). Enter here and on Section II, Line 13b. . . . . . . . . . . . . . . . . . Description of property Date acquired Cost or other basis (a) (b) (c) Depreciation allowed or allowable in prior years (d) t 2. Less: Section 179 depreciation included in Schedule C-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. t 1. Total Section 179 depreciation (do not include in items below) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. t PA PIT law does not permit any of the bonus depreciation elections added to the Internal Revenue Code (IRC). PA PIT law limits IRC Section 179 current expensing to the expensing allowed at the time you placed the asset into service or in effect under the IRC of 1986 as amended Jan. 1, 1997. For each asset, you must also report straight-line depreciation, unless not using an optional accelerated depreciation method. You need straight-line depreciation to take advantage of Pennsylvania’s Depreciation and Basis Adjustment rule when you sell the asset. See the PA Personal Income Tax Guide - Net Gains or Losses from the Sale, Exchange or Disposition of Property for the Depreciation and Basis Adjustment rule. 3. Life Method of calculating depreciation or rate (f) (e) Depreciation for this year (g) MM/DD/YY 4. Other depreciation: Buildings . . . . . . . . . . . . Furniture and fixtures . . . Transportation equipment Machinery and other equipment Other (specify) . . . . . . . . ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ....................... ............................... 5. 6. Any depreciation included in Schedule C-1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6. 7. Balance (subtract Line 6 from Line 5). Enter here and on Section II, Line 13a. . . . . . . . . . . . . . . . . . . . 7. t 5. Totals (add all Line 4 amounts) . . . . . . SIDE 2 1903210050 Reset Entire Form PREVIOUS PAGE 1903210050 NEXT PAGE PRINT Pennsylvania Department of Revenue Instructions for PA-40 Schedule C Profit or Loss from Business or Profession (Sole Proprietorship) PA-40 C IN (EX) 05-19 OVERVIEW Use PA Schedule C to report income or loss from a business you operate or a profession you practice as a sole proprietor. Your activity qualifies as a business if your primary purpose for engaging in the activity is income or profit, you conduct your activity with continuity and regularity and you satisfy the “Commercial Enterprise” test. Certain rental activity may be business income and not rental income. If you are a sole member of an LLC, complete PA Schedule C. For additional information regarding the definition of a business or profession, and for Pennsylvania’s requirements for reporting income and expenses, refer to the PA Personal Income Tax Guide – Net Income or (Loss) from the Operation of a Business, Profession or Farm section for additional information. NOTE: Pennsylvania determines income and (loss) under accepted accounting principles, systems or practices that are acceptable by standards of the accounting profession and consistent with regulations of the department. ● You may use any accounting method for PA purposes, as long as you apply your accounting methods consistently, it clearly reflects income and is not inconsistent with Pennsylvania law or regulations of the department. ● PA law does not contain provisions for statutory employees. Federal statutory employees may be required to report PA taxable income on Line 1a, PA-40, and use PA Schedule UE to deduct expenses. However, you may use PA Schedule C to provide the type and amount of expenses that are included as Miscellaneous Expenses on PA Schedule UE when there are similar types of expenses for your occupation or position. In such cases, the business will report the business name and activity as “Schedule UE Miscellaneous Expenses” with zero amounts reported as Gross receipts or sales and Total income. You must also include “See PA Schedule C for expenses” on Section III, Line 16 of PA Schedule UE. If using PA Schedule C to report PA Schedule UE expense types and amounts, you must follow PA Schedule UE rules for allowable and unallowable expenses. See the PA Personal Income Tax Guide – Gross Compensation section for more information. ● Unless a loss results from an activity where a net profit has not been realized in at least two years of a five consecutive-year period, an owner may deduct all losses from a business or profession in the taxable year realized. Report all transactions directly related to your business or profession on PA Schedule C. ● Do not use the installment method for sales of inventory if you sell such inventory in the regular and ordinary course of a business or profession. Include interest on such sales in gross receipts. Maintain separate books and records for PA PIT purposes and file PA Schedule C. Even if you have no differences between your federal and Pennsylvania expenses, you must complete and include PA Schedule C to report your income for Pennsylvania personal income tax purposes. IMPORTANT DIFFERENCES BETWEEN FEDERAL AND PENNSYLVANIA RULES You may use any accounting method for PA purposes, as long as you apply your accounting methods consistently. PA law does not have material participation rules. Report all transactions that are directly related to your business or profession on your PA Schedule C. If you own or operate more than one business, you must submit a separate PA Schedule C for each business operation. The following federal schedules and instructions do not apply for PA Schedule C: SCHEDULE A You may not deduct nonbusiness-related personal interest, taxes and casualty losses on any PA PIT return. SCHEDULE E Report rental and royalty income on PA Schedule E, unless engaged in the business of making your property or rights available in a public market place with intention to realize a profit. SCHEDULE F Report farming activity on PA Schedule F. SCHEDULE SE Do not report self-employment taxes to Pennsylvania. FORM 4562 If using bonus depreciation, do not use Form 4562. Use Schedule C-2 on Side 2 of this schedule. The maximum deduction PA income tax law permits under IRC Section 179 is $25,000. If you have income or loss from more than one business, profession or farm, you may not deduct more than $25,000 for all business activities. FORM 4684 Report gain or (loss) from all business activity on PA Schedule C. Include a casualty or theft loss of business property (or gain, if insurance proceeds exceed the basis of the property lost or taken) on Line 4 of PA Schedule C. You may refer to the federal schedule for an explanation of gain or (loss) items, but do not submit the federal schedule. FORM 4797 Report other sales, exchanges and involuntary conversions of business property on Line 4 of PA Schedule C if the property sold was replaced. Refer to the federal schedule for an www.revenue.pa.gov RETURN TO PAGE 1 PA-40 C PREVIOUS PAGE NEXT PAGE PRINT 1 explanation of gain/loss items, but do not submit the federal schedule. FORM 8271 Do not report or deduct any transactions related to tax shelters. FORM 8594 Report the acquisition or disposition of business assets on Line 4 of PA Schedule C. Refer to the federal schedule for an explanation for gain/loss items, but do not submit the federal schedule. FORM 8824 Do not report a like-kind exchange on PA Schedule C. PA law does not have like-kind exchange provisions. You must include the gain or loss from a sale, exchange or disposition of a business asset on Line 4 of PA Schedule C if the transaction was a normal business transaction. You must report any gain or loss from the sale of a nonbusiness asset or property or the sale of a business or segment thereof on PA Schedule D if the property sold was not replaced. FORM 8829 Include your allowable expenses for the business use of your home on Line 37 of PA Schedule C. Refer to the federal schedule for an explanation of this expense, but do not submit the federal schedule. Pennsylvania does not recognize the federal safe harbor method for determining the allowable deduction for business use of a residence for Pennsylvania Personal Income Tax purposes. All home office expenses must be determined by using actual costs incurred. OTHER PENNSYLVANIA AND FEDERAL INCOME TAX DIFFERENCES PA income from the operation of business generally differs from the income determined for federal income tax purposes. Further, Pennsylvania will no longer accept a PA Schedule C-F Reconciliation for the purpose of adjusting the federal business income to PA business income. Therefore, the items which were previously included as additions to PA income or expense on the PA Schedule C-F Reconciliation should be included with the specific line of income or expense on the PA Schedule C. In addition, those items which Pennsylvania does not require be reported as income or does not allow as expense in determining net business income, which are allowed in the determination of net federal business income, should not be included in the specific business income or expenses on PA Schedule C. Examples of items that Pennsylvania requires as additions to income include: any advance receipts for goods or services; working capital interest or dividend income including federal-exempt interest and dividend income from obligations of other states; gains from the sale of business assets where the property is replaced by similar property; gains from like-kind exchanges; gains from involuntary conversions (such as those from IRC Section 1033); and gains from the sale of property where PA basis is different than federal basis. Examples of items that Pennsylvania allows as additions to expenses that require a reduction for federal tax purposes include: meals, travel and entertainment expense deduction of 100 percent by Pennsylvania for the expenses incurred; 2 any differences in depreciation related to differences in basis of assets, amount of allowable Section 179 expense, or method of depreciation for federal or PA purposes; and any other reductions in federal expenses allowed at 100 percent for PA personal income tax purposes. Examples of items that Pennsylvania requires as reductions in federal income or expenses include: income taxes based upon gross or net income; any differences in depreciation related to differences in basis of assets, amount of allowable Section 179 expense, or method of depreciation for federal or PA purposes; recognition of cancellation of debt income; recognition of income from IRC Section 481(a) spread adjustments; payments for owner pension, profit-sharing plans, deferred, or welfare benefit plans; percentage depletion; direct expensing of organizational expenses or syndication fees; losses from the sale of property where PA basis is different than federal basis; and any other income or expenses where there is a specialized federal treatment that is not specifically addressed or allowed by PA personal income tax law that might involve additional expensing, expensing verses capitalization, carry back or carry forward of losses, income recognition, or other special treatments. Other differences between Pennsylvania and federal income tax include the following: IDCs. Special rules apply for the direct expensing of intangible drilling & development costs (IDCs). Up to one-third of the amount of IDCs incurred in tax years beginning after Dec. 31, 2013 may be directly expensed, with the remaining amount amortized over 10 years. Taxpayers may also elect to amortize the full amount of the IDCs over 10 years. The election to expense any IDCs is made by including an amount on Line 34 of PA Schedule C. Amortization of the IDCs must be reported separately on Line 35 of PA Schedule C. IDCs incurred prior to Jan. 1, 2014 must be amortized over the life of the well. Qualified Joint Ventures. Pennsylvania is not a community property state. Therefore, for PA personal income tax purposes, a taxpayer and the taxpayer’s spouse must each report on a separate PA Schedule C their share of income from a business entity they own that is considered a qualified joint venture for federal income tax purposes. LINE INSTRUCTIONS IDENTIFICATION INFORMATION Complete each line. OWNER'S NAME Enter the name of the business owner. If you are married and you jointly owned the business with your spouse, you must complete separate PA Schedule C’s. If you and your spouse have separate business activities, complete separate PA Schedule(s) C. SALES TAX LICENSE NUMBER Enter your Pennsylvania Sales Tax License Number if you have one. Otherwise, leave this space blank. FEDERAL NAICS CODE Provide your Federal NAICS Code as identified on your Federal Schedule C. SOCIAL SECURITY NUMBER (SSN) Enter the SSN of the business owner. PA-40 C RETURN TO PAGE 1 www.revenue.pa.gov PREVIOUS PAGE NEXT PAGE PRINT LINE A LINE 1a MAIN BUSINESS ACTIVITY Describe the business or professional activity that provided your principal source of income for Line 1. Use the same description you use for your Federal Schedule C. Enter the principal business or professional code you use on your Federal Schedule C. GROSS RECEIPTS OR SALES Include all amounts you received in operating your business or profession. PA law does not contain provisions for statutory employees. A statutory employee reports his or her PA taxable income on Line 1a, PA-40, and uses PA Schedule UE to deduct his or her allowable employee business expenses. LINE B INSTALLMENT SALES You may use the installment method for sales of inventory. Include interest on such sales in gross receipts. BUSINESS NAME Enter the name of the business as you registered with the IRS. LINE C TAXPAYER IDENTIFICATION NUMBERS Enter the Federal Employer Identification Number (FEIN) assigned to the business. If you do not have an FEIN for your federal Schedule C, leave this space blank. LINE D BUSINESS ADDRESS Enter the complete address of the business. LINE E CLOSING INVENTORY VALUATION Fill in the appropriate oval. Submit an explanation if necessary. LINE F ACCOUNTING METHOD Fill in the oval for the accounting method you use for this business. Submit an explanation if necessary. LINE G INVENTORY CHANGES Check “Yes” or “No” for this question. Submit an explanation if necessary. LINE H OFFICE IN-HOME Check “Yes” if you deduct expenses for an office in-home. Check “No” if you do not deduct expenses for an office in-home. LINE I OUT OF BUSINESS If the business is out-of-existence at the end of the tax year for which you are filing, fill in the oval. SECTION I INCOME Use generally accepted accounting principles and practices to maintain your books and records, and report your income from your business or professional activity. LAND AND BUILDINGS For PA purposes, you may not include the sales of land and buildings on PA Schedule C unless the property sold is replaced. When the property sold is not replaced, the department deems such sales as dispositions of a segment of a business to be reflected on PA Schedule D. LINE 1b RETURNS AND ALLOWANCES This amount is the same for both Pennsylvania and federal purposes. If you report a different amount for Pennsylvania, submit an explanation. LINE 2 COST OF GOODS SOLD This amount is the same for Pennsylvania and federal purposes. If you report a different amount for Pennsylvania, submit an explanation. LINE 4 OTHER INCOME Enter gross proceeds you may have to report elsewhere on your federal tax return, including but not limited to: ● The sale of business assets when you reinvest the proceeds in business operations; ● The gain (loss) on replacing business property, including land or buildings used in operating your business or profession; and ● Interest and dividend income from short-term investments to generate working capital. Submit a statement explaining the amount you enter. See various sections of the PA Personal Income Tax Guide for explanations of allocable interest, dividends and gains to business or professions. Include other income you enter on Line 6, Federal Schedule C, but not refunds of federal taxes and credits you did not deduct for PA purposes. SECTION II DEDUCTIONS Use generally accepted accounting principles and practices to maintain your books and records and report your expenses from your business or professional activity. PA law does not impose dollar or percentage limitations on allowable expenses. You may deduct 100 percent of the PA allowable business or professional expenses incurred during the taxable year. www.revenue.pa.gov RETURN TO PAGE 1 PA-40 C PREVIOUS PAGE NEXT PAGE PRINT 3 NOTE: You may have incurred other expenses for entertainment facilities (boat, resort, ranch, etc.), living accommodations (except for employees on business) or vacations for yourself, your employees or their families. Reduce your total business expenses in Section II by the total of these personal expenses. Generally, you may usually use your federal Schedule C expenses for PA PIT purposes. See the other Pennsylvania and federal income tax differences explanation beginning on Page 1 of the instructions for more information. You may not use federal amounts after making certain elections to accelerate or defer expenses or spread expenses over more than one taxable year. These instructions explain those expense categories where PA PIT rules and federal rules differ. LINE 7 AMORTIZATION Pennsylvania generally follows federal rules. You have the option to use any amortization method allowable under generally accepted accounting principles and practices. Include the amortization of any start-up costs in excess of $5,000 on this line. Do not include the amortization of IDCs on this line. See line 35 for IDC amortization. LINE 10 CAR AND TRUCK EXPENSES You may deduct 100 percent of your actual vehicle expenses or you may use the federal standard mileage rate. If you use the federal standard mileage rate, you may not deduct any actual operating expenses, including depreciation and lease costs. Follow the Federal Schedule C rules for these expenses. If you use your car or truck for both business and personal travel, you may only deduct the business portion of your expenses. LINE 13a REGULAR DEPRECIATION Use any depreciation method permissible under generally accepted accounting principles and practices as long as you consistently apply the method. NOTE: PA PIT law does not permit any of the bonus depreciation elections added to the Internal Revenue Code. For each asset, you must also report straight-line depreciation, unless not using an optional accelerated depreciation method. You need straight-line depreciation to take advantage of Pennsylvania’s Depreciation and Basis Adjustment rule when you sell the asset. See the PA Personal Income Tax Guide – Net Gains or Losses from the Sale, Exchange or Disposition of Property section for the Depreciation and Basis Adjustment rule. Pennsylvania Law requires that taxpayers use straight-line depreciation if an asset’s basis for determining Pennsylvania depreciation is different from its basis for federal income tax purposes. 4 LINE 13b SECTION 179 EXPENSE PA PIT law limits IRC Section 179 current expensing to the expensing allowed at the time you placed the asset into service or in effect under the IRC of 1986 as amended to Jan. 1, 1997. The maximum deduction that PA Income Tax law permits under IRC Section 179 is $25,000. Pennsylvania follows the federal definitions for listed property. If you use Section 179 for federal purposes, you must use Section 179 for Pennsylvania personal income tax purposes. See Informational Notice, Personal Income Tax 2012-05 for additional information. LINE 14 DUES AND PUBLICATIONS You may deduct dues and publications, but only to the extent directly used for ordinary business purposes. You must exclude any personal use of such expenses. LINE 15 EMPLOYEE BENEFIT PROGRAMS OTHER THAN ON LINE 23 You may not deduct any payments you make for your own personal coverage. Pennsylvania does not allow any personal expenses on any PA tax return. LINE 17 INSURANCE You may deduct life insurance on yourself or your spouse only if the business is the beneficiary (not your spouse, other family members or other persons). The business must use the insurance proceeds to continue business operations. If deducting insurance premiums, the proceeds are business income on Line 4 of Section I. LINE 18 INTEREST ON BUSINESS INDEBTEDNESS Deduct interest on business debt only. If you personally borrow money to acquire a business interest or to improve your business, you may not deduct the interest on any PA schedule or PA tax return. LINE 20 LEGAL AND PROFESSIONAL SERVICES Only deduct those expenses you incur in operating your business or profession. You may not deduct any personal expenses. You may include business accounting and tax return preparation expenses, but not the costs for personal accounting and tax returns. LINE 21 MANAGEMENT FEES Include any management fees paid in conjunction with the operation of the business to any related or non-related entity. PA-40 C RETURN TO PAGE 1 www.revenue.pa.gov PREVIOUS PAGE NEXT PAGE PRINT LINE 23 LINE 33 PENSION AND PROFIT-SHARING PLANS FOR EMPLOYEES Only deduct those expenses directly related to pension and profit-sharing plans for employees. You may not deduct any pension or profit-sharing expenses for your own personal retirement benefits. WAGES Do not reduce your wage expense for any federal credits you claim. Add back any wage expense excluded in order to claim a federal credit. Do not deduct the costs of your own participation. LINE 25 RENT ON BUSINESS PROPERTY Only deduct those expenditures you incurred in the operation of your business or profession. LINE 27 SUBCONTRACTOR FEES Deduct subcontractor fees that were not included in your calculation of cost of labor from Line 3 of Schedule C-1. Also include any fees paid to payees not included as employees to whom regular wages were paid. LINE 29 TAXES Deduct tax expenses other than taxes based on income. You may not deduct taxes based on net income, federal income taxes or the one-half of self-employment taxes the IRS allows. Do not deduct taxes paid to other states or foreign countries based on income. Do not deduct estate, inheritance, legacy, succession or gift taxes. Assessments for betterments and improvements are not allowed. Business privilege taxes and/or gross receipts taxes are acceptable deductions. LINE 31 TRAVEL AND ENTERTAINMENT PA law does not follow federal law. Deduct 100 percent of your actual travel and entertainment expenses. You may never deduct the personal portion of your travel and entertainment expenses, whether for yourself, your spouse, your dependents or any other person. You must calculate your expenses using actual expense amounts. You may not use federal per-diem rates when determining your Pennsylvania expenses. LINE 32 UTILITIES Certain utilities, which are not subject to sales and use tax when purchased exclusively for residential use, become subject to sales and use tax when used for commercial purposes. If you are including electricity, natural gas, fuel oil, or kerosene in your calculation of the business use of your home, you should report use tax due on the prorated expense amount. The use tax on these utilities should be paid via a PA-1, Use Tax Return, or if you are required to file a sales tax return, as part of that return. If you have a regular recurring use tax liability on utilities, you should register for a use tax account using the Online PA-100 at www.pa100.state.pa.us. LINE 34 IDCS (1/3 CURRENT EXPENSING) If the business includes an amount on this line, it elects to directly expense up to one-third of the amount of Intangible Drilling and Development Costs (IDCs) incurred for the tax year for any tax year beginning after Dec. 31, 2013. See Informational Notice, Personal Income Tax 2013-04 for additional information. LINE 35 IDCS (AMORTIZATION) Report the amortization expense of IDCs incurred for all tax years on this line. IDCs incurred in tax years beginning prior to Jan. 1, 2014 must be amortized over the life of the well. IDCs incurred in tax years beginning after Dec. 31, 2013 may be amortized over 10 years (120 months). LINE 36 START-UP COSTS (DIRECT EXPENSE) Up to $5,000 of start-up costs may be directly expensed in the first year in which the business begins operations for tax years beginning after Dec. 31, 2013. The department will follow IRC Section 195(b)(1)(A) regarding business start-up costs where expenses over $5,000 must be amortized over 180 months and any amount of expenses over $50,000 requires a direct reduction in the direct expense amount. For tax years prior to Jan. 1, 2014, start-up costs are required to be amortized over 180 months. Record only the direct expense amount of start-up costs on Line 36 of PA Schedule C. Report the amortization of any start-up costs on Line 7 of PA Schedule C. LINE 37 OTHER EXPENSES Deduct any other costs of doing business or providing professional services if such costs are permitted under generally accepted accounting principles and practices. Itemize the additional expenses you claim, and enter the total on Line 37, Total other expenses. You may deduct: ● 100 percent of the PA sales tax paid on a depreciable business asset. However, on disposition, your Pennsylvania basis and federal basis for that asset will be different. ● Charitable contributions made from your business account and acknowledged publicly by the recipient. Personal charitable contributions are not allowed. ● Expenses using the capitalization rules established by your trade, profession, or industry, under its generally accepted accounting principles and practices. Once elected, use this method consistently. www.revenue.pa.gov RETURN TO PAGE 1 PA-40 C PREVIOUS PAGE NEXT PAGE PRINT 5 ● 100 percent of expenses incurred for removing barriers to individuals with disabilities and the elderly. This is not a credit but a direct expense in arriving at the net income or loss. ● Home office expenses. Pennsylvania generally follows the federal rules for determining the portion of the expenses for a home office. Pennsylvania does not follow the federal safe harbor rules for determining the allowable expense amount. See Line 32, Utilities, for additional information. ● Any other expenses allowed under generally accepted accounting principles or financial accounting standards board rules but are not allowable or limited under federal rules. Itemize these expenses. LINE 38 TOTAL EXPENSES Add Lines 6 through 37. SCHEDULE C-1 COST OF GOODS SOLD AND/OR OPERATIONS Generally, if you engaged in a trade or business in which the production, purchase or sale of merchandise was an income-producing factor, you must consider inventories at the beginning and end of your tax year. In determining inventory value, use the cost, lower of cost or market or other method allowable under generally accepted accounting principles and practices. If you change methods of valuing inventory, restate the value at the beginning of the year based on the changed method, and include an explanation. There is no provision under PA PIT law similar to IRC Section 481(a) that permits taxpayers to spread the income effect of a change in method over a specified period. PA PIT rules also do not permit valuing inventory using uniform capitalization rules under IRC section 263 A (a) and (b) and inventories calculated using this method for federal purposes must be recalculated for PA PIT purposes. LINE 39 SCHEDULE C-2 NET PROFIT OR LOSS Subtract Line 38 from Line 5. In calculating net profit or loss from your business or profession, report your entire loss in this taxable year. DEPRECIATION Complete this schedule if you are using a depreciation method other than federal depreciation reported on your federal Schedule C. See the instructions for Line 13 on Page 4. 6 PA-40 C RETURN TO PAGE 1 www.revenue.pa.gov PREVIOUS PAGE PRINT
Extracted from PDF file 2019-pennsylvania-form-pa-40-c.pdf, last modified December 2009

More about the Pennsylvania Form PA-40 C Individual Income Tax TY 2019

This is the Pennsylvania version of Schedule C, which is used to report profit and loss from an unincorporated business.

We last updated the PA Schedule C - Profit or Loss From Business or Profession in January 2020, so this is the latest version of Form PA-40 C, fully updated for tax year 2019. You can download or print current or past-year PDFs of Form PA-40 C directly from TaxFormFinder. You can print other Pennsylvania tax forms here.

Related Pennsylvania Individual Income Tax Forms:

TaxFormFinder has an additional 174 Pennsylvania income tax forms that you may need, plus all federal income tax forms. These related forms may also be needed with the Pennsylvania Form PA-40 C.

Form Code Form Name
Form PA-40 Pennsylvania Income Tax Return
Form PA-40 PA-V PA-40 Payment Voucher
PA-40 Income Tax Return
Form PA-40 W-2S PA Schedule W-2S - Wage Statement Summary
Form PA-40 A PA Schedule A - Interest Income
Form PA-40 SP PA Schedule SP - Special Tax Forgiveness
Form PA-40 B PA Schedule B - Dividend Income
Form PA-40 UE PA Schedule UE - Allowable Employee Business Expenses
Form PA-40 T PA Schedule T - Gambling and Lottery Winnings
Form PA-40 ESR-I Declaration of Estimated Tax

Download all PA tax forms View all 175 Pennsylvania Income Tax Forms


Form Sources:

Pennsylvania usually releases forms for the current tax year between January and April. We last updated Pennsylvania Form PA-40 C from the Department of Revenue in January 2020.

Show Sources >

About the Individual Income Tax

The IRS and most states collect a personal income tax, which is paid throughout the year via tax withholding or estimated income tax payments.

Most taxpayers are required to file a yearly income tax return in April to both the Internal Revenue Service and their state's revenue department, which will result in either a tax refund of excess withheld income or a tax payment if the withholding does not cover the taxpayer's entire liability. Every taxpayer's situation is different - please consult a CPA or licensed tax preparer to ensure that you are filing the correct tax forms!

Historical Past-Year Versions of Pennsylvania Form PA-40 C

We have a total of nine past-year versions of Form PA-40 C in the TaxFormFinder archives, including for the previous tax year. Download past year versions of this tax form as PDFs here:


2019 Form PA-40 C

PA Schedule C - Profit or Loss from Business or Profession (Sole Proprietorship) (PA-40 C)

2017 Form PA-40 C

PA Schedule C - Profit or Loss from Business or Profession (PA-40 C)

2016 Form PA-40 C

PA Schedule C - Profit or Loss from Business or Profession (PA-40 C)

PA Schedule C - Profit or Loss From Business or Profession 2015 Form PA-40 C

PA Schedule C - Profit or Loss from Business or Profession (PA-40 C)

Forms/Publications 2014 Form PA-40 C

PA Schedule C - Profit or Loss From Business or Profession (PA-40 C)

PA Schedule C - Profit or Loss From Business or Profession (PA-40 C) 2013 Form PA-40 C

PA Schedule C - Profit or Loss From Business or Profession (PA-40 C)

PA Schedule C (PA-40 C) 2012 Form PA-40 C

PA Schedule C (PA-40 C)

Forms/Publications 2011 Form PA-40 C

PA Schedule C (PA-40 C)


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