Schedule C Law and Legal Definition

A taxpayer is supposed to file Schedule C along with a Form 1040 if s/he receives income from self-employment. A taxpayer shall also offset the gross income by the expenses paid to generate income. A taxpayer shall reduce the taxable income by subtracting business expenses from gross business income. It, therefore, reduces the tax liability. Both self-employment income and expenses are to be reported on Schedule C. Form 1120 shall be required in the case of a corporation, partnership or limited liability company to report its business income. Form 1120S is required for a corporation, or a Form 1065 is required for a partnership or limited liability company.