Schedule C Changes for 2011 Taxes - What You Need to Know

Getting ready to file Schedule C for 2011 taxes? Check out these changes before you begin:

• Merchant card reporting. Lines 1a and 1b have been added for reporting of gross receipts received by credit or debit card. The requirement for reporting these payments has been deferred for 2011, so just put a zero in line 1a and enter the total gross receipts on line 1b.

• Mileage rate. On line 9, use the standard IRS mileage rate for 2011 to calculate business mileage deductions. There are two different rates for 2011: January 1 through June 30, the business rate is 51 cents for business miles, and July 1 through December 31 the business rate is 55.5 cents. The rate for medical/moving expenses changed from 19 cents per mile to 23.5 cents per mile; the driving for charity rate stayed at 14 cents per mile throughout 2011.

• Information reporting. Lines I and J have been added to include information about your reporting of payments using Form 1099. These forms are required if you pay $600 or more to independent contractors or certain other businesses. See the information on Form 1099-MISC for 2011, and note that the 1099-MISC is one of several types of 1099 forms.
• Qualified joint ventures reporting rental real estate income must now report that income on Schedule E (rental real estate and royalty income) rather than Schedule C.

• Other changes to Schedule C for 2011 include changes for heavy highway use tax,  reporting rental real estate income and reporting of musical composition expenses.

As usual with this kind of tax preparation issue, I would strongly urge you to check with your CPA or tax preparer before you complete Schedule C.

Read about the Five Steps to Completing Schedule C

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