Sole Proprietors' Tax Returns

April 13, 2006

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If you are a sole proprietor, you must file Schedule C (or Schedule C-EZ if you qualify), Profit or Loss From Business, with your Form 1040, U.S. Individual Income Tax Return, on an annual basis, to report your business income and deductions. Sole proprietors are also required to file Schedule SE, Self-Employment Tax, with their Form 1040 as well. There may be other forms and schedules required, depending on the specific nature of your business activities during the year.

For calendar year taxpayers, the filing and payment of tax due date for these returns and schedules is April 15 (April 16, 2007, for the 2006 filing season).

If you want an automatic six-month extension to file your 2006 return, you can file Form 4868, Application For Automatic Extension of Time To File U.S. Individual Income Tax Return, by April 16. However, you must pay any tax you estimate will be due by April 16 or you may be subject to interest and penalties on overdue taxes. Your actual return would then be due on October 15.

Warning

Remember, the automatic extension only applies to the filing of your return, not to the payment of any tax that may be due. For the 2006 tax season, you must pay any tax that is due by April 16^th of 2007, or you may be subject to interest and penalties on the overdue taxes.

Fiscal year taxpayers. If you are a sole proprietor who uses a fiscal year rather than a calendar year, you must file your individual income tax return (including all the applicable schedules) no later than the 15th day of the fourth month after the end of your tax year. You are entitled to the same automatic six-month extension to file your return that a calendar year taxpayer is entitled to, but you must file for the extension on Form 4868 by the due date for filing the return. The due date for the filing of your return is then the 15th day of the sixth month after the original due date of your return.

Among the Business Tools are Form 1040, Schedule C, Schedule C-EZ, Schedule SE and Form 4868. They are in Adobe Portable Document Format (.pdf), and you will need the free Acrobat Reader to view and print the file.