Schedule C line 27a: what other expenses is for, and why a large 27a is not a problem

Line 27a is a catch-all with its own detail schedule. A preparer would rather redistribute a well itemized 27a than untangle a wrong bucket.

ExactSplit · Updated February 18, 2026

The shape of Part II

Part II of Schedule C is where a sole proprietor reports expenses. It has 24 named lines running from 8 through 27b. Advertising is line 8. Car and truck expenses are line 9. Contract labor is 11, depreciation is 13, insurance other than health is 15, legal and professional services is 17, office expense is 18, rent is 20a and 20b, supplies is 22, taxes and licenses is 23, travel is 24a, meals is 24b, utilities is 25, and wages are 26.

Then there is line 27a, other expenses, which takes everything that fits none of the named lines. It is not a single number you write in. Part V of the form asks you to list each type of other expense with its own amount, and the total carries up to 27a.

Where modern expenses actually go

For a one person business in 2026, a surprising share of expenses have no named line. Software subscriptions have no line. Cloud hosting has no line. Domain renewals, coworking day passes, professional memberships, online courses, payment processing fees if you treat them as an expense rather than a reduction of income, and bank fees all belong on 27a.

The form was designed decades ago for businesses with rent, wages, supplies, and a truck. A freelance designer's expenses look nothing like that. It is normal for 27a to be the largest single expense line on a modern Schedule C, and there is nothing wrong with that as long as Part V itemizes it.

The temptation to force things into named lines

Bookkeeping software often tries to make 27a small, on the theory that a big other expenses line looks suspicious. So it maps a design tool subscription to office expense, a hosting bill to utilities, and a coworking pass to rent. Each of those is defensible individually, and each of them is a small lie.

The problem is not that the IRS will object to the mapping. It is that the mapping hides information. A preparer looking at a 4,000 dollar utilities line has no way to know that 3,200 of it is cloud hosting rather than electricity. If they need to know, because a client is claiming a home office and the utilities need to be allocated, the wrong bucket has just made their job harder and the return less accurate.

A large 27a with a clear Part V, by contrast, is transparent. Every item is listed with its amount. A preparer can redistribute it to named lines in a few minutes if they want to, and they can see exactly what the business spends money on.

When the merchant really does decide the line

There are cases where the merchant name tells you the line with confidence, and in those cases the named line is right. A payroll provider is wages, line 26. An ad platform is advertising, line 8. An airline or hotel is travel, line 24a. A contract labor marketplace is line 11. A CPA or attorney is line 17. Business insurance is line 15.

Those are safe because the merchant category and the tax category are the same thing. A charge from a payroll company is wages by definition. The trouble starts when software extends that confidence to merchants where the category is ambiguous. A charge from a large retailer could be supplies, office expense, or personal. A charge from a software company could be a business tool or a personal subscription. Guessing a named line for those is worse than leaving them on 27a with the merchant name attached.

The lines that are not really expense lines

Two things on Part II are worth flagging because people put the wrong things in them. Line 27b is the energy efficient commercial buildings deduction under section 179D and requires Form 7205. Almost no sole proprietor uses it, and nothing should be mapped there automatically.

Line 30, business use of home, sits outside Part II entirely. It is calculated on Form 8829 or the simplified method worksheet and carried to line 30 separately. Rent for a home office does not go on line 20b, and home utilities do not go on line 25. They go through the home office calculation.

What a good export looks like

The useful output for a preparer is not a set of totals. It is a transaction level listing with the assigned line on each row, so the preparer can sort, filter, and re-bucket in a spreadsheet rather than trust someone else's mapping. Alongside that, a summary by line, and a clear statement of what the data does not include.

That last part matters more than it sounds. A bank feed only sees what went through the connected accounts. Cash expenses, personal cards used for business, and invoices billed but not yet paid are all missing. Cost of goods sold, depreciation, and the home office deduction are not in a bank feed either. A preparer working from an export needs to know those gaps exist, and the place to say so is in the file itself, because the file gets emailed and opened weeks later by someone who never saw the software.

How ExactSplit handles it

ExactSplit's Schedule C export uses a deliberately short list of merchant rules for the cases where the merchant genuinely determines the line, and sends everything else to 27a with the merchant name attached. On a typical year that puts most expenses on 27a, and that is the honest answer.

The CSV carries every transaction with its assigned line, then a summary by line, then the caveats as comment rows. The printable version gives the caveats a page of their own. Mileage from the trip log is folded into line 9 with the log attached. Everything a preparer needs to redistribute 27a is in the file, and nothing has been quietly filed somewhere it does not belong.