If you are a sole proprietorship, you would enter your cost of goods sold and other business expenses on Federal Schedule C (Form 1040) Profit or Loss From Business. Self-employment income is reported on Schedule C, and the net profit or loss is reported on Line 11 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income.

For additional information on inventories and accounting for them in your business, go to page 15 of IRS Publication 334 Tax Guide for Small Business.

To enter the Cost of Goods Sold data on Schedule C in the TaxAct program (if you need help accessing Schedule C, go to our Schedule C - Entering Sole Proprietorship in Program FAQ):

1. From within your Schedule C, continue with the interview process until you reach the screen titled Great! Let's get started on expenses for this business, then click Enter expenses.
2. On the screen titled Business Income - Cost of Goods Sold (COGS), click Yes.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.