1040 - Bad Debt

Business Bad Debt

Business bad debts can be entered as an other expense on the related schedule that reports that business income.

• If filing Schedule C, go to the C screen and enter the business-related bad debt amount under Part II – Other expenses, line 27a.
• If filing Schedule F, go to the F screen and enter the business-related bad debt amount under Part II – Expenses, line 32 Other expenses.

For more information about business bad debts, see:

• Instructions for Schedule F
• Instructions for Schedule C
• Publication 535, Business Expenses, Chapter 10
• Publication 334, Tax Guide for Small Business, Chapter 8
• Tax Topic 453 

Non-business Bad Debt

Non-business bad debts are reported as short-term capital losses on Form 8949, Sales and Other Dispositions of Capital Assets.

For more information on non-business bad debts, see Publication 550 Investment Income and Expenses (Including Capital Gains and Losses).

An attachment for each bad debt reported is required. For information on attaching information to a return, see Related Links.