What is IRS Form 1040 Schedule 1?
Form 1040 Schedule 1 is used to report certain types of income that aren't listed on the main 1040 form. It's also used to claim some tax deductions.
Key Takeaways
- Form 1040 Schedule 1 is the place to report types of income not included on Form 1040, including taxable refunds of state and local income taxes, alimony received, income or loss from a business; rent and royalty income, and more.
- Some items included on Schedule 1 must be accompanied by an additional form or schedule, such as Schedule C to report income or loss from a business or Schedule E to report rental income or royalties.
- You can include adjustments to income in Part II of Schedule 1. These can include contributions to health savings accounts, the deductible part of self-employment taxes, and IRA contribution deductions.
- Schedule 1 adjustments to income reduce your adjusted gross income without having to itemize deductions.
Schedule 1
Form 1040 may be the main form people think of at tax time, but most taxpayers need to attach one or more additional forms, or schedules, to their federal income tax return. One of those forms is Schedule 1 (Form 1040), which lists additional types of income that aren't listed on Form 1040, as well as some additional adjustments to income.
Of course, if you use TurboTax to file your tax return, you just need to answer a few questions and we'll complete the right forms based on the information you provide. Still, it's a good idea to familiarize yourself with the forms you need so you know what to look for when you review your tax return before filing.
What is IRS Form 1040 Schedule 1?
Before the IRS and the Treasury redesigned Form 1040 in 2018, it included several lines for reporting various income types, with a line as a catchall for "Other Income." It also included several lines for adjustments to income, also known as "above-the-line" deductions.
The new version gives taxpayers just a handful of lines for reporting the most common types of income, such as:
- Wages
- Interest and dividends
- Retirement income
- Social security benefits
- Capital gains or losses
The need to report any other income types and adjustments to income didn't go away — that reporting has simply moved to Schedule 1.
Part I – Additional Income
Part I of Schedule 1 is where you'll report the following types of income:
- taxable refunds of state and local income taxes
- alimony received (for divorce agreements dated before December 31, 2018)
- income or loss from a business
- gains or losses from sales of business property
- rent and royalty income
- income from a partnership, S corporation, or trust
- farm income or loss
- unemployment compensation
Line 8 of the 2024 Schedule 1 is now the catchall for other types of income that don't fit into the predefined lines, such as prizes and awards or gambling winnings.
Looking down the lines of Schedule 1, you may notice that some of these items also require an additional form or schedule. For example, if you have income or loss from a business, you'll also need to attach Schedule C to your return. If you need to report rent or royalties as income, you'll also have to attach Schedule E.
Once you have entered all of your various types of income on Schedule 1, the total is transferred to line 8 of Form 1040.
TurboTax Tip:
You don't have to use Schedule 1 if all of your income comes from the five categories included on Form 1040: wages, interest and dividends, retirement income, Social Security benefits, or capital gains or losses.
Part II – Adjustments to Income
Adjustments to income go in Part II of Schedule 1. These include:
- up to $300 of unreimbursed expenses for educators who work in schools
- unreimbursed business expenses of military reservists, performing artists, and fee-based government officials (the only qualifying professions for certain business deductions)
- contributions to health savings accounts (HSAs)
- moving expenses for members of the Armed Forces
- the deductible part of self-employment taxes
- contributions to a SEP, SIMPLE, or qualified retirement plan
- health insurance premiums for self-employed people
- penalties on early withdrawals of savings
- alimony payments (for divorce agreements dated before December 31, 2018)
- IRA contribution deduction
- up to $2,500 of deductible student loan interest
These are valuable deductions for many taxpayers for two reasons. First, these deductions directly reduce your adjusted gross income, opening up the possibility of taking other deductions and receiving tax credits that have adjusted gross income limits.
For example, to claim the full American Opportunity Tax Credit, your 2024 modified adjusted income must be $80,000 or less ($160,000 or less if you're married and file a joint return with your spouse). You can't claim the credit if your modified adjusted gross income is over $90,000 ($180,000 for joint filers).
Say you have $91,000 of income. However, you contributed $3,000 to your health savings account, $8,000 to a SEP IRA, and paid student loan interest adding up to $1,000. With a total of $12,000 in above-the-line deductions, your adjusted gross income is $79,000, meaning you're likely eligible for the full American Opportunity Tax Credit.
Another reason adjustments to income are so valuable is that you don't need to itemize deductions to claim them. Above-the-line deductions reduce your income before applying either the Standard Deduction or itemized deductions. Since nearly 90% of taxpayers take the Standard Deduction, above-the-line deductions are a nice tax break without the extra paperwork of itemizing.
Who needs to file Form 1040 Schedule 1?
Not everyone needs to attach Schedule 1 to their federal income tax return. The IRS trimmed down and simplified the old Form 1040, allowing people to add on forms as needed. You only need to file Schedule 1 if you have any of the additional types of income or adjustments to income mentioned above.
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