Tax preparers should have sufficient knowledge regarding Schedule A; where clients list their qualifying expenses to reduce their tax liability. Sam is a new tax preparer, and he believes that Schedule C is similar to Schedule A. What is the purpose of Schedule C and who is required to file it?

• Employees use it to report their income and expenses to qualify for tax credits and deductions related to their business expenses.
• It is used by individuals who operate a business as a sole proprietor to report their income or loss from the business activity, this includes certain amounts also shown on Form 1099.
• It is used by corporations to report their income and expenses and to qualify for tax credits and deductions related to their business activities.
• It is used by individuals who operate a Partnership or S-Corporation to report their income or loss from the business activity, as well as wages and expenses.