Self-employed business owners can use the shorter Schedule C-EZ to report their business income and expenses. You qualify to use Schedule C-EZ if your total business expenses are $5,000 or less. If your expenses are more than $5,000 or if you are reporting a business loss (expenses are greater than your income), then you must use the longer Schedule C. Schedule C-EZ (PDF, 2 pages, includes instructions) Should I File Schedule C or Schedule C-EZ? (IRS.gov) Tips for Schedule C-EZ (About.com) What Counts as Business Income? Business income is income you earned because you owned and operated a business. The IRS explains business income this way: "If there is a connection between any income you receive and your business, the income is business income. A connection exists if it is clear that the payment of income would not have been made if you did not have the business." (Publication 334) Business income includes: Income received for services rendered as an independent c...