Schedule C Line by Line: Every IRS Expense Category

Schedule C requires you to sort every business expense into one of about twenty specific lines — but the form itself gives you almost no guidance on what actually belongs where. If you've ever stared at "Line 18: Office expense" wondering whether your Adobe subscription counts, this guide is for you. For a higher-level look at how to approach categorizing (and where AI can help), see our companion guide on categorizing business expenses for Schedule C.

Here's a line-by-line breakdown of the most common Schedule C categories (Part II), with practical examples for each.

Line 8: Advertising

• Digital ads — paid search, social media campaigns, email marketing services
• Print and broadcast — newspaper, magazine, radio, and TV commercials
• Print materials — business cards, flyers, brochures, catalogs
• Outdoor and signage — billboards, banners, vehicle wraps with business branding
• Promotional items — giveaways, branded merchandise, sponsorships

Line 9: Car and truck expenses

You can deduct vehicle costs one of two ways — not both:

Actual expenses: gas and oil, repairs and maintenance, vehicle insurance (plus depreciation on the vehicle itself).

Standard mileage rate: the IRS publishes a per-mile rate each year that's meant to cover all costs of vehicle ownership — gas, insurance, repairs, and depreciation — in one number. You just need to track your business mileage for the year.

Line 10: Commissions and fees

Sales commissions, referral and finder's fees, shared commissions, and fees paid to non-employee agents.

Line 11: Contract labor

Payments to external freelancers, independent contractors, and specialty sub-contractors — generally the people you'd issue a 1099-NEC to.

Line 12: Depletion

Rarely applicable for the small businesses Heightly serves. Depletion covers the exhaustion of a natural resource itself (e.g., a mineral deposit or timber stand) through capital investment and extraction — it does not cover general operating costs.

Line 13: Depreciation

The calculated yearly write-off of capital assets — purchases with long-term value, like a computer or an office desk. A capital asset generally can't be expensed all at once in the year you bought it; instead it's deducted over time according to IRS rules for that asset type.

Line 14: Employee benefit programs

Employer-paid contributions to accident and health plans, group-term life insurance, and dependent care assistance programs for employees.

Line 15: Insurance (other than health)

Standard commercial insurance policies protecting your business operations, equipment, and assets.

Line 16: Interest

• 16a — Mortgage interest
• 16b — Other: business loan interest and interest charges on a business credit card

Line 17: Legal and professional services

Attorneys, accountants, and short-term consultants.

Line 18: Office expense

Stationery and postage. Office subscriptions (software, cloud tools) are better tracked under Other expenses — see Line 27b below.

Line 19: Pension and profit-sharing plans

Contributions made for your employees. Contributions to your own retirement plan go elsewhere on your return, not here.

Line 20: Rent or lease

• 20a — Vehicles, machinery, and equipment
• 20b — Other business property: office space, storage facilities

Line 21: Repairs and maintenance

Business equipment repairs, tool repairs, and repairs to property or machinery.

Line 22: Supplies

Materials used to perform your service, or supplies used for packaging and providing your goods.

Line 23: Taxes and licenses

• Business licenses and permits — annual LLC filing fees, local business licenses, health department permits, zoning permits, professional state license renewals
• The employer's portion of payroll taxes — FICA, FUTA, and SUTA — for your W-2 employees
• Real estate taxes on a commercial building, storefront, or warehouse your business owns
• Personal property taxes on business-owned equipment, furniture, or machinery
• Sales tax you collected from customers and remitted to the state, if you included it in gross receipts on Line 1

Line 24: Travel and meals

24a — Travel: airfare, train and bus fares, cruise travel to a business destination; hotels and short-term rentals during a business trip; taxis, rideshares, subway fares, and rental cars at your destination; checked-baggage fees and shipping of business display materials; hotel tips, porter fees, and dry cleaning while traveling.

24b — Deductible meals: food purchased while traveling overnight for business; a meal with a current or prospective client where a substantial business discussion takes place during or around the meal; food provided occasionally to employees during long shifts or late meetings.

Line 25: Utilities

Electricity, gas, water, sewer, trash and recycling, business phone lines, and internet — for a dedicated commercial location. Home office utilities do not go here; they're handled through the home office deduction instead.

Line 26: Wages

Wages and salary paid to employees (excluding your own owner compensation), adjusted for any employment credits.

Line 27b: Other expenses — the catch-all, broken down

This is the line everyone struggles with, because the IRS just says "other expenses" and leaves you to itemize them yourself in Schedule C, Part V. In practice, a handful of sub-types cover most of what lands here:

• Software and Apps — cloud services, web hosting, digital tools and subscriptions
• Bank and Merchant Fees — credit card processing fees or online payment platform charges (as long as they aren't already captured under Line 16 interest)
• Dues and Memberships — professional membership dues and trade publications
• Uniforms and Safety Gear — specialized work clothing
• Postage and Shipping — mailing, courier, and delivery services

Breaking these out matters for two reasons: it makes your return easier to defend if it's ever reviewed, and it gives you (or your accountant) a clearer picture of where your money is actually going year over year.

How Heightly handles this automatically

Heightly's categorizer already sorts transactions into these named Line 27b sub-types — Software and Apps, Bank and Merchant Fees, Dues and Memberships, Uniforms and Safety Gear, and Postage and Shipping — and subtotals them together for your Other expenses total, so you get the itemized detail without doing it by hand.

For more on how Heightly categorizes the rest of your Schedule C, see our guide on categorizing business expenses for Schedule C.

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