If this is just a one-time thing, and you are not in the trade or business (which requires regularity and a profit-seeking motive) of being a surrogate, you do not report income or expenses on Schedule C. The only expenses you can take are your out of pocket medical expenses on Schedule A of Form 1040, subject to the regular rules, requiring you to itemize and there is a 10% adjusted gross income floor (2017) to taking medical expenses. The income would be reported on line 21 of Form 1040 as “other income.”
If you are in the trade or business of being a surrogate because you engage in the activity with continuity and regularity for a profit, your income and related expenses goes on Schedule C. The net income is subject to self-employment tax.
