What type of income must be reported on Schedule C?

Schedule C is specifically designed for reporting income earned from a business or profession operated by the taxpayer as a sole proprietorship or as a single-member LLC. This form allows individuals to detail their self-employment income, which encompasses earnings from freelance work, gig economy jobs, or any business activities they engage in independently.

Self-employment income is crucial for determining not only tax liability but also self-employment tax obligations, which fund Social Security and Medicare. This is distinct from other types of income, such as wage income, which is reported on Form 1040, investment income that is typically disclosed on Schedule D, or passive income which may involve different types of reporting, often using Schedule E. Understanding where to report different income types aligns with the IRS requirements and aids in accurate tax filings.