A Must for Freelancers: Completing Schedule S of Your Tax Return

Non-specialists may wonder why this form runs to only two pages. Many self-employed individuals use it solely to enter their profit or loss — the effort involved in completing it is modest. This is because the detailed profit calculation is carried out on a separate form (EUER). Schedule S records only the result of that calculation.

If you earn income from self-employed work in the assessment year, you must submit Schedule S to the tax office. This applies in particular to income from freelance activities. If you generate revenue as a trader, the tax authority will require Schedule G (Anlage G) instead. Do not be misled by the general term "self-employed work": all income from self-employed trading activities is recorded separately by the tax office.

If you pursue several freelance activities, you may report the income from all of them on a single Schedule S. The form provides an additional line for this purpose. There is no need to complete multiple forms.

However, where you are assessed jointly with your spouse, you may not combine your income from self-employed work. Each spouse must complete their own Schedule S.

Submission of Schedule S is mandatory if you have income from freelance activity. The amount of that income is irrelevant — even losses must be reported on this form. The responsible tax office requires a complete overview of your economic activities as a self-employed person.

The key figure is entered in line 4 of Schedule S: this is where you record your profit from freelance activity. If you have a profit from a further freelance activity, you add it in line 5. Profit is the amount resulting from the calculation: business receipts minus business expenses.

In the remaining fields you enter various separate items of income. These include income from interests in partnerships such as a GbR. You must also inform the tax office of income from other self-employed work, which includes, among other things, remuneration paid to supervisory-board members.

In addition, you may apply in line 16 for the tax concession for retained profits under § 34a EStG (Income Tax Act).

On the second page of Schedule S you will find the section on disposal gains. You only need to complete this section if you sold your business or ceased trading during the assessment year.

The "Miscellaneous" section closes the form: use these fields to enter remuneration and expense allowances for voluntary and part-time activities. For example, record an expense allowance for your work as a sports coach at a sports club.

Statute requires freelancers and traders to prepare a cash-basis income statement (EUER). You must use the EUER form for this purpose. It contains numerous fields for various categories of business receipts and business expenses — complete them in accordance with your actual income and expenditure items. When it comes to business expenses, the question is whether they are fully deductible or subject to restriction. Larger capital investments are depreciated over several years. This form is used to arrive at a profit or loss figure, which you then enter on Schedule S.

If you entrust your tax return to Guhr Steuerberatung, our experienced staff will take care of Schedule S as well. Our experts will also advise you in depth: in connection with Schedule S, the question sometimes arises, for instance, whether freelancers should make use of the tax concession under § 34a EStG. At Guhr Steuerberatung, you will receive well-founded answers to this and many other questions.

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