U.S. · Tax forms
Schedule 1 line 3, business income or (loss).
It comes from Schedule C. What belongs there and what does not.
Line 3 (“Business income or (loss). Attach Schedule C”) carries the net profit or loss from Schedule C. The instructions say that if you operated a business or practiced your profession as a sole proprietor, you report your income and expenses on Schedule C, even if you have no business expenses.
Look up where income goes
Result
Schedule 1 Line 3 at a glance, 2025 edition
| Income | Where it goes | What the IRS says |
|---|---|---|
| Sole proprietor business or profession | Schedule C, then line 3 | Report income and expenses on Schedule C |
| Self-employment income or notary fees | Schedule C, not line 8 | Do not report on lines 8a through 8z; use Schedule C even with no expenses |
| Nonemployee compensation (1099-NEC, 1099-MISC, 1099-K) | Generally Schedule C | Not on line 8 unless it is not self-employment income, such as a hobby or sporadic activity |
| Hobby or activity not for profit | Line 8j | Activity not engaged in for profit income; see Pub. 525 |
| Rental real estate, royalties, partnerships, S corporations, trusts | Line 5 | Attach Schedule E |
| Farm income | Line 6 | Attach Schedule F |
| Other gains or (losses) | Line 4 | Check the box if any come from Form 4797 or 4684 |
A loss is a loss
The label shows “or (loss)” because a Schedule C loss is entered in parentheses. On Schedule 1, line 10 you combine lines 1 through 7 and 9, so a loss reduces the additional income that goes to Form 1040, line 8.
Self-employment tax and the related deduction
Line 3 income is also subject to self-employment tax. Schedule SE figures it, Schedule 2, line 4 reports it, and Form 1040, line 23 takes other taxes, including self-employment tax, from Schedule 2, line 21. The deductible part of the tax is on line 13 of Schedule SE and goes on Schedule 1, line 15.
Not every payment is business income
The Schedule 1 instructions tell you not to put self-employment income on line 8. Income from a hobby or a sporadic activity that is not self-employment is the exception, and it is reported on line 8j.
Worked example
Alex freelances as a photographer and Schedule C shows a net profit of $31,400. Line 3 shows $31,400. With no other Part I income, line 10 is $31,400 and Form 1040, line 8 is $31,400. Alex also completes Schedule SE for self-employment tax. Names and amounts are made up.
More line pages in this set
Related lines: Schedule 1 Line 10, Schedule 1 Line 8, Schedule 1 Line 16.
Sources
- Instructions for Form 1040 and 1040-SR (2025): Page last reviewed or updated May 7, 2026. Read November 2, 2026.
- Schedule 1 (Form 1040) 2025 Read November 2, 2026.
Tax year 2025 forms and instructions (Instructions for Form 1040 page last reviewed or updated May 7, 2026). Line labels were read from the IRS form PDFs posted on the date read; line numbers and labels change between tax years, so check them against the form for your tax year. Names in worked examples are made up.
Frequently asked questions
What goes on Schedule 1 line 3?
The net business income or loss from Schedule C, which you attach to your return.
Do I need Schedule C if I have no expenses?
The instructions say to use Schedule C for self-employment income even if you have no business expenses.
Where does hobby income go?
Activity not engaged in for profit income goes on Schedule 1, line 8j (see Pub. 525).
Where does rental income go?
Line 5, with Schedule E, covers rental real estate, royalties, partnerships, S corporations and trusts.
What about self-employment tax?
Schedule SE figures it; Schedule 2, line 4 reports it. Half of it is deductible on Schedule 1 line 15.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.