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October 27, 2021
Question

Difference Between Schedule C and Form 2106

  • October 27, 2021
  • 2 replies
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What is the difference Between Schedule C and Form 2106?

    2 replies

    DoninGA
    October 27, 2021

    A Form 2106 is only used to report Employee business expenses.   

    IRS Form 2106 Instructions - https://www.irs.gov/pub/irs-pdf/i2106.pdf

     

    Use Form 2106 if you were an Armed Forces reservist, qualified performing artist, fee-basis state or local
    government official, or employee with impairment-related work expenses.  
    Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do not fit into one of the listed categories may not use Form 2106.

     

    A Schedule C is used to report Self-Employment income and expenses from your business.

    IRS Schedule C instructions - https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

     

    Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity

    WendyS
    October 27, 2021

    Hi Celeste567,

     

    Schedule C is used to report a profit or loss from a self-employed business, including any side jobs or gigs you may do.    

    For your convenience, I am including a link for a helpful article:  Am I considered self-employed?

    https://ttlc.intuit.com/community/self-employed/help/am-i-considered-self-employed/00/26535



     

    Form 2106 is used to report employee business expenses.  This applies to individuals who are employees (not self-employed) and had out of pocket job related business expenses that the employer did not reimburse you.  Current federal tax legislation suspended the miscellaneous itemized deduction with a 2% floor, which included these out of pocket miscellaneous employee job expenses.   The form 2106 is currently only used if you are employed as an Armed Forces reservist, a qualified performing artist, a fee –basis state or local government official, or an individual with a disability claiming impairment-related work expenses.

     

    Schedule C reports self-employed income and expenses for all self-employed individuals while Form 2106 only reports unreimbursed out of pocket expenses for employees in certain categories listed above.

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