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Wages Expenses (Line 26 of Schedule C)

Line 26 on Schedule C of the tax form relates to “Wages,” which refers to the cost of wages and salaries paid to employees who work for your business.

Wages expenses that you may be able to deduct on Line 26 include:

  1. Regular wages and salaries: This includes the amount you paid to your employees for their regular work hours.
  2. Overtime pay: This includes any additional pay you provided to employees for working overtime.
  3. Bonuses: This includes any bonuses or other incentives paid to employees.
  4. Commissions: This includes any commissions paid to employees as part of their compensation.
  5. Employee benefits: This includes the cost of providing benefits to your employees, such as health insurance, retirement plans, or paid time off.

It’s important to note that there are certain requirements and limitations associated with deducting wages expenses. For example, you must have a legitimate business reason for paying the wages, and you must keep accurate records of the expenses, including payroll records, tax forms, and other documentation.

Additionally, there are specific rules around hiring independent contractors, which are not considered wages and are reported on a separate line on Schedule C.

If you have any questions about how to report wages expenses on your tax return, it’s a good idea to consult with a tax professional or accountant.