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Taxpayers are required to show all income and related deductions for the tax year. However, you can make various elections that will also vary the outcome. Not reporting expenses is as incorrect as not reporting some income. Schedule C is deemed "earned income". And earned income determines the amount of the Earned Income Credit, which is refundable. Overstating income is a method of increasing this Earned Income Credit. Which is a very serious offense that the IRS is very deeply concerned about. Have a tax firm review what you are filing, and forget about the advise you will receive via the forum. I am not saying that all is bad advise, only some is just knee jerk responses to how to file your 1040!