IRS documents describe business deductions as ordinary and necessary expenses paid or incurred while carrying on a trade or business. “Ordinary” is described as common and accepted in the relevant industry, and “necessary” is described as helpful and appropriate for the business activity. What IRS Documents Describe IRS publications and form instructions explain that deductible business expenses must meet both the ordinary and necessary standard. These rules are discussed primarily in the Instructions for Schedule C (Form 1040) and in IRS Publication 334, Tax Guide for Small Business. IRS documents also explain that personal, living, and family expenses are not deductible as business expenses. Capital expenses, such as many equipment purchases, are generally not deducted all at once; instead, IRS guidance describes recovering these costs over time through depreciation or amortization, depending on the type of property and circumstances. The Schedule C Instructions list categories of expenses that may be deductible when they meet IRS requirements. These categories include, among others, advertising, car and truck expenses, commissions and fees, contract labor, depreciation, employee benefit programs, insurance, interest, legal and professional services, office expenses, rent, repairs and maintenance, supplies, taxes and licenses, travel, utilities, wages, and certain business meals. IRS guidance also describes special rules for specific expense types. These include home office expenses, cost of goods sold, health insurance for self-employed individuals, and expensing or depreciating qualifying property. IRS documents direct readers to additional publications and forms for these topics, depending on the nature of the expense. IRS materials emphasize that proper classification, recordkeeping, and documentation are important considerations when determining whether an expense meets the requirements described in IRS guidance. Where to Find Details IRS documents that explain business deductions include:

IRS documents describe quarterly estimated taxes as periodic payments made during the year toward income tax and, where applicable, self-employment tax. These payments are intended to cover tax on income that is not subject to regular withholding. What IRS Documents Describe: IRS publications and instructions explain that estimated tax applies to income such as self-employment income, interest, dividends, capital gains, rental income, and other income not fully covered by withholding. IRS guidance frames estimated tax as part of the “pay-as-you-go” tax system, where tax is paid throughout the year rather than only when a return is filed. IRS materials explain that individuals use Form 1040-ES, Estimated Tax for Individuals, to calculate and submit estimated tax payments. The form and its instructions describe an Estimated Tax Worksheet used to project expected income, adjustments, credits, and total tax for the year. IRS documents explain that the calculated annual amount is typically divided into multiple payments during the year. IRS guidance also discusses that estimated tax payments are generally made in four installments across the tax year. The due dates and methods of payment are described in Form 1040-ES instructions and related IRS publications. IRS documents further explain that making sufficient estimated payments, combined with any withholding, is relevant to determining whether an underpayment applies. IRS materials emphasize that estimated tax rules and thresholds may vary by year and circumstance, and direct readers to review the instructions applicable to the specific tax year involved. Where to Find Details: IRS publications and resources that explain quarterly estimated taxes include: - Form 1040-ES, Estimated Tax for Individuals - Instructions for Form 1040-ES - IRS Publication 505, Tax Withholding and Estimated Tax - IRS Publication 334, Tax Guide for Small Business - IRS Estimated Tax FAQs (IRS.gov) Related IRS Explanations

IRS documents describe payment app income as amounts received through payment card transactions or third-party network transactions, such as those processed by payment apps and online marketplaces. These transactions are commonly reported using Form 1099-K. What IRS Documents Describe IRS publications and instructions explain that payment apps and online marketplaces may act as third-party settlement organizations. When these platforms process payments for goods or services, they may be required to report the gross amount of those transactions to the IRS and to the recipient using Form 1099-K. IRS guidance describes that amounts flowing through payment apps can include payments for business activities, sales of goods, or other reportable transactions. The IRS explains that Form 1099-K is an informational return used to summarize payment activity processed by these platforms during a calendar year. IRS materials also distinguish between payments for goods or services and personal transfers. Guidance explains that personal transactions—such as gifts, reimbursements, or splitting household expenses—are not considered taxable income, even if they move through the same payment apps. IRS documents acknowledge that, in some cases, Form 1099-K may include amounts that are not taxable, and provide guidance on how those situations are addressed when filing a return. IRS explanations further note that reporting requirements and thresholds related to payment apps may change by tax year. As a result, IRS documents emphasize reviewing the instructions for the specific year involved and maintaining independent records of payment activity. Where to Find Details IRS publications and resources that explain payment app income include: - Instructions for Form 1099-K - IRS Publication 525, Taxable and Nontaxable Income - IRS Publication 334, Tax Guide for Small Business - Instructions for Schedule C (Form 1040) - IRS Gig Economy Tax Center (IRS.gov)

IRS documents describe Schedule C (Form 1040) as the form used to report income or loss from a business or profession operated as a sole proprietorship. What IRS Documents Describe: IRS publications and instructions explain that Schedule C is used to report: - Income received from a trade or business operated by an individual - Business expenses related to that activity - Net profit or loss, which flows to Form 1040 IRS guidance explains that a business activity reported on Schedule C must generally be carried on regularly and with the intent of earning income or profit, as described in the Schedule C instructions. IRS documents also describe how certain amounts reported on information returns—such as Forms 1099-NEC, 1099-MISC, and 1099-K—may be included on Schedule C when they relate to business or self-employment activity. The instructions explain how gross receipts and expenses are combined on Schedule C to determine net results. The IRS further explains that Schedule C applies to individuals operating as sole proprietors and does not apply to corporations or partnerships, which use different forms and reporting rules. Where to Find Details IRS guidance on Schedule C is primarily described in: - Instructions for Schedule C (Form 1040), Profit or Loss From Business - “About Schedule C (Form 1040)” overview page on IRS.gov - IRS Publication 334, Tax Guide for Small Business - IRS Publication 525, Taxable and Nontaxable Income - What IRS documents say about business deductions - Does the IRS treat 1099-K income differently? - How the IRS describes quarterly estimated taxes Further reading (official IRS-based guide):

IRS documents describe Form 1099-K and Form 1099-NEC as two different information returns used to report payments, depending on how payments are processed and who makes the payment. What IRS Documents Describe Form 1099-KIRS instructions describe Form 1099-K as an information return used by payment settlement entities to report the gross amount of certain payment transactions. These transactions generally involve: - Payment card transactions (such as credit or debit cards) - Third-party network transactions processed through payment apps or online marketplaces IRS documents explain that Form 1099-K reports gross payment amounts processed through a platform, not net income. The reporting requirements and thresholds for Form 1099-K are described in the Instructions for Form 1099-K and may change by tax year. Form 1099-NEC: IRS guidance describes Form 1099-NEC as an information return used to report nonemployee compensation. This generally refers to payments made directly to individuals who are not employees, such as independent contractors or other service providers. IRS documents explain that Form 1099-NEC is filed by the person or business that pays for services, rather than by a payment processor or platform. The form reports compensation paid for services performed in the course of a trade or business, subject to reporting rules described in IRS instructions. Key Differences Described in IRS Guidance IRS documents distinguish the two forms based on: - Who issues the form - Type of payments reported - Purpose of reporting IRS publications explain that the presence of one form versus the other depends on how the payment is made, not on the type of work alone. Where to Find Details - Instructions for Form 1099-K - Instructions for Form 1099-NEC - IRS Publication 525, Taxable and Nontaxable Income - IRS General Instructions for Certain Information Returns - IRS.gov/1099K and IRS.gov/1099NEC