How to fill out a 1040 form for business owners and self-employed individuals for 2025

Filing taxes is stressful, but mastering Form 1040, the two-page core of your federal return, reduces errors, penalties, and delays. More than half of small business owners (51%) say they use an accountant, which can make tax prep and filing easier.

If you’re self-employed or run a small business, you’ll use Form 1040 to report your income, claim deductions, and calculate your total sole proprietorship taxes. Let’s walk through how to fill out a 1040 form step-by-step for the 2025 tax year, plus what schedules you might need to include.

1. Determine if you need to file a Form 1040

2. Fill in your personal information

3. Report your income

4. Figure out your deductions

5. Determine the schedules you need

6. Calculate your tax

7. File your Form 1040

3 Common mistakes to avoid when filing Form 1040

Things to keep in mind about the 1040 form

Find peace of mind come tax time

1. Determine if you need to file a Form 1040

If you work or earn income, you’ll likely need to file a Form 1040. This form, also known as the US Individual Income Tax Return, is how most individuals file their taxes. 

The 1040 form is a two-page document for taxpayers to determine, report, and file their income. It’s also here that taxpayers calculate their deductions and ultimately figure out how much they owe in federal income taxes.

Generally, the Form 1040 requirements require you to file a tax form for 2025 if:

• You have over $400 in net earnings from self-employment 
• Your filing status is single, and your gross income is at least: 
• $15,000 if under 65
• $17,000 if 65 or older 
• Your filing status is head of household, and your gross income is at least: 
• $22,500 if under 65
• $24,500 if 65 or older 
• Your filing status is married filing jointly, and your gross income is at least: 
• $30,000 if both spouses are under 65
• $31,600 if one spouse is 65 or older 
• $33,200 if both spouses are 65 or older
• Your filing status is married filing separately, and your gross income is at least: 
• $5 for any age

You can report your business income and expenses using Form 1040 if you’re self-employed, a small business owner who runs your company as a sole proprietorship, or your company is a single-member LLC. If your company is an S corporation or C corporation, you’ll need to prepare a separate corporate tax return.

2. Fill in your personal information

Accurately filling out your personal information is the first step to completing your Form 1040. This section captures key details about you and anyone else you're claiming on your tax return. 

Fill out your personal information:

• Your full name and Social Security number (SSN)
• Your spouse's full name and SSN (if filing jointly)
• Your date of birth
• Your current address
• Full names and SSNs for any dependents you're claiming

In addition to your personal details, you'll need documentation to support your income and any deductions or credits you're claiming. Organizing these beforehand will make the tax filing process much smoother.

Some of the key documents you'll want to gather:

• W-2 forms from your employer(s)
• 1099 forms for other income (interest, dividends, self-employment, etc.)
• Mortgage interest statements (Form 1098)
• Medical expense receipts
• Charitable donation receipts
• Property tax records
• Any other relevant tax forms or documents you received

Refer to a copy of your previous year's tax return, if available, for helpful information as you fill out your 2025 Form 1040.

3. Report your income

Boxes 1-15 are for reporting your income. Your income can include items like:

• Wages
• Tip income 
• Interest 
• Dividends
• Retirement income 
• Social Security benefits
• Capital gains and losses

Box 8 of the income section includes additional income from your Schedule 1, which is a form for additional types of income that do not appear on page one of the 1040 form.

For example, Schedule 1 includes items like rent and royalty, alimony, business income or loss, income from S-corps, or unemployment.

Stay on top of 1099s

See your vendors and anyone who needs a 1099 in one place to help stay compliant. QuickBooks gives you unlimited 1099 e-filing with printing and mailing at no additional cost. This makes tracking income and reporting easier for small business owners and self-employed individuals.**

4. Figure out your deductions

For your 1040 form, you can either choose standard or itemized deductions. Most filers choose the standard deductions, but if you have itemized deductions that are greater than the standard deduction, you can itemize them with Schedule A. 

The IRS standard deduction amount for 2025 is $16,100 if you are single or married filing separately, $32,200 for married filing jointly, or $24,150 for the head of household.

Meanwhile, itemized deductions include expenses like: 

• Medical and dental expenses
• Taxes paid
• Mortgage interest
• Charitable contribution
• Casualty and theft losses

Note these are different from self-employed tax deductions, which you’ll include on your Schedule C. 

5. Determine the schedules you need

Taxpayers with simpler tax returns, such as those with just W-2 income and the standard deduction, will likely only need to file Form 1040. However, small business owners, self-employed individuals, and others with unique situations will likely need to file an additional schedule and attach it to their 1040 form. 

Here are some of the most common schedules that you might need to append to your 1040 form:

• Schedule A for reporting itemized deductions like medical expenses 
• Schedule B for interest and dividend income 
• Schedule C for reporting business revenues and expenses as a self-employed individual or sole proprietor
• Schedule D for asset sales that generate capital gains or losses 
• Schedule E for income or loss from rental real estate 
• Schedule SE for calculating and reporting self-employment tax 
• Schedule 1 for reporting other income like unemployment or business income from your Schedule C

Note that you might also need to use other schedules, such as Schedule EIC for Earned Income Credit, Schedule F for farm profit or loss, or Schedule H for household employment taxes.

6. Calculate your tax

Now, it's time to calculate your tax liability. To do this accurately, you'll first need to determine your taxable income. This is found by subtracting either your standard or itemized deductions from your adjusted gross income.

The US uses a progressive tax system, meaning you pay different tax rates on different portions of your income. These rates increase as your income increases. For example, in 2025, the first $11,925 of taxable income for a single filer is taxed at 10%, the next $36,550 (up to $48,475) is taxed at 12%, and so on. 

Only the portion of your income within each tax bracket is taxed at that rate. This is your marginal tax rate—the rate applied to the last dollar you earned.

Here are the 2025 marginal tax rates:

• 37% for incomes over $626,350 (single) / $751,600 (married filing jointly)
• 35% for incomes over $250,525 (single) / $501,050 (married filing jointly)
• 32% for incomes over $197,300 (single) / $394,600 (married filing jointly)
• 24% for incomes over $103,350 (single) / $206,700 (married filing jointly)
• 22% for incomes over $48,475 (single) / $96,950 (married filing jointly)
• 12% for incomes over $11,925 (single) / $23,850 (married filing jointly)
• 10% for incomes $11,925 or less (single) / $23,850 or less (married filing jointly

With your taxable income and an understanding of marginal tax rates, you can determine your tax liability. 

Here’s step-by-step instructions for calculating your tax liability: 

1. Find your taxable income: Subtract your deductions from your adjusted gross income.
2. Use the tax tables: The 2025 tax tables in the Form 1040 instructions will show the tax rates for each income bracket based on your filing status.
3. Calculate your tax: Apply the appropriate tax rate to each portion of your taxable income based on the tax brackets.
4. Subtract credits and withholdings: Your final tax liability is the amount of tax you owe minus any tax credits and tax withholdings.

While Form 1040 instructions include tax tables for calculating your tax liability, using tax software can help you automatically calculate this.

7. File your Form 1040

Now that you know how to fill out a 1040 form, it’s time to file it with the IRS. Luckily, this part is much easier than filling it out. You can file your tax forms with the IRS via mail or go paperless this tax season and file electronically. 

Filing electronically, also known as e-filing, can mean you get a refund quicker, especially if you send the refund to your bank account. No matter how you file your 1040 form, the tax due date is the deadline for both filing and paying your taxes.

3 Common mistakes to avoid when filing Form 1040

Even experienced business owners and self-employed individuals can stumble on small errors that slow processing or reduce refunds. Here are key areas to watch:

1. Claiming incorrect deductions or credits

Using the wrong deduction or credit can trigger an audit or reduce your refund. Double-check standard vs. itemized deductions, and make sure you have receipts or records to support any business deductions.

2. Incorrect personal or dependent information

Errors in Social Security numbers, names, or addresses are surprisingly common. Small typos can delay processing or cause the IRS to reject your return.

3. Filing late or not e-filing

Missing the filing deadline or sending a paper return unnecessarily can delay your refund and incur late fees. E-filing is faster, more accurate, and helps you get your refund sooner.

Things to keep in mind about the 1040 form

Before you file, it helps to understand a few of the most common questions taxpayers have about Form 1040. Here’s a closer look at what information you’ll need, what key lines mean, and whether you should file if you have little or no income.

You need key personal and income details to complete Form 1040

To file Form 1040, gather your personal information, including your name, Social Security number, and the same for any dependents. You’ll also need documents that show your income, like W-2s for wages, 1099s for contract or freelance work, and records of dividends or Social Security benefits. Having everything ready makes filling out your return faster and easier.

Line 16 shows your total tax owed

Line 16 is one of the most important numbers on your Form 1040; it shows your total tax due for the year. This figure includes the tax on your taxable income and any additional taxes from forms like 8814 (child’s interest and dividends) or 4972 (lump-sum distributions). Double-check this line to ensure it matches your calculations or software output.

You might not need to file if you have no income

You generally don’t have to file Form 1040, if you earned no income during the year, but some exceptions apply. For example, if you qualify for certain tax credits, owe special taxes, or need to report health coverage. 

Checking the IRS filing requirements each year ensures you stay compliant and don’t miss out on potential refunds or credits.

Find peace of mind come tax time

Whether you fill out your 1099 and 1040 forms on your own, use software, consult an accountant, or do all three, it’s a good idea to know the tax laws. But if you don’t want to read through all the IRS instructions on how to fill out a 1040 form, there are tools to help simplify the process for you. 

Consider using accounting software like QuickBooks to keep track of your expenses during the current year—making it easier for you to complete the various schedules and file your taxes accurately.