The purpose of Schedule E is to report income or loss from rental properties. The IRS treats rental earnings as passive income, meaning that it requires little effort or active involvement on your part. If you rent out real estate and provide essential services like heat, water, and electricity, you’d use Schedule E to declare your income and expenses. Schedule C is where you report earnings and expenses related to personal services provided to tenants, such as cleaning, food delivery, and security. The IRS classifies these activities as business since they require substantial time and effort.