Schedule 1 (Form 1040)

Schedule 1 (Form 1040), officially titled “Additional Income and Adjustments to Income,” is a crucial component of the U.S. federal income tax return that many taxpayers must complete alongside their main Form 1040. This supplementary form, introduced as part of the Tax Cuts and Jobs Act of 2017’s effort to simplify tax filing, serves as a detailed breakdown of various types of income and adjustments that don’t have a dedicated line on the streamlined Form 1040. Schedule 1 is designed to capture a wide range of income sources beyond wages and salaries, such as business income, rental income, and unemployment compensation, as well as above-the-line deductions like student loan interest and self-employment tax. By segregating these additional items on a separate form, the IRS aims to maintain a cleaner, more straightforward main Form 1040 while still allowing taxpayers to report all necessary financial information accurately.

How to Complete Schedule 1 (Form 1040)?

Part I: Additional Income

1. Line 1 – Taxable refunds, credits, or offsets of state and local income taxes:
   • Enter any taxable state or local tax refunds you received.
2. Line 2a – Alimony received:
   • Enter the amount of alimony received.
   • Line 2b – Date of original divorce or separation agreement: Follow instructions from the IRS to determine whether this applies to you.
3. Line 3 – Business income or (loss):
   • Attach Schedule C and enter the result here.
4. Line 4 – Other gains or (losses):
   • Attach Form 4797 and enter the result here.
5. Line 5 – Rental real estate, royalties, partnerships, S corporations, trusts, etc.:
   • Attach Schedule E and enter the result here.
6. Line 6 – Farm income or (loss):
   • Attach Schedule F and enter the result here.
7. Line 7 – Unemployment compensation:
   • Enter the total amount of unemployment compensation received.
8. Line 8 – Other income:
   • 8a – Net operating loss (if applicable, enter the amount in parentheses if it’s a loss)
   • 8b – Gambling winnings
   • 8c – Cancellation of debt
   • 8d – Foreign earned income exclusion from Form 2555 (enter the excluded amount in parentheses)
   • 8e – Income from Form 8853
   • 8f – Income from Form 8889
   • 8g – Alaska Permanent Fund dividends
   • 8h – Jury duty pay
   • 8i – Prizes and awards
   • 8j – Activity not engaged in for profit income
   • 8k – Stock options
   • 8l – Income from the rental of personal property if engaged in for profit but not in the business of renting such property
   • 8m – Olympic and Paralympic medals and USOC prize money (see instructions)
   • 8n – Section 951(a) inclusion (see instructions)
   • 8o – Section 951A(a) inclusion (see instructions)
   • 8p – Section 461(l) excess business loss adjustment
   • 8q – Taxable distributions from an ABLE account (see instructions)
   • 8r – Scholarship and fellowship grants not reported on Form W-2
   • 8s – Nontaxable amount of Medicaid waiver payments included on Form 1040, line 1a or 1d (enter the amount in parentheses)
   • 8t – Pension or annuity from a nonqualified deferred compensation plan or a nongovernmental section 457 plan
   • 8u – Wages earned while incarcerated
   • 8z – Other income (list type and amount):
9. Line 9 – Total other income:
   • Add lines 8a through 8z and enter the total here.
10. Line 10 – Total additional income:
    • Combine lines 1 through 7 and line 9. Enter the result here and on Form 1040, 1040-SR, or 1040-NR, line 8.

Part II: Adjustments to Income

1. Line 11 – Educator expenses:
   • Enter qualified expenses up to the limit set by the IRS.
2. Line 12 – Certain business expenses of reservists, performing artists, and fee-basis government officials:
   • Attach Form 2106.
3. Line 13 – Health savings account deduction:
   • Attach Form 8889.
4. Line 14 – Moving expenses for members of the Armed Forces:
   • Attach Form 3903.
5. Line 15 – Deductible part of self-employment tax:
   • Attach Schedule SE.
6. Line 16 – Self-employed SEP, SIMPLE, and qualified plans:
   • Enter contributions made.
7. Line 17 – Self-employed health insurance deduction:
   • Enter premiums paid.
8. Line 18 – Penalty on early withdrawal of savings:
   • Enter any penalties incurred.
9. Line 19a – Alimony paid:
   • Enter the amount of alimony paid.
   • Line 19b – Recipient’s SSN: Enter recipient’s Social Security Number.
   • Line 19c – Date of original divorce or separation agreement (see instructions).
10. Line 20 – IRA deduction:
    • Enter the deductible amount.
11. Line 21 – Student loan interest deduction:
    • Enter the amount paid.
12. Line 22 – Reserved for future use.
13. Line 23 – Archer MSA deduction:
    • Enter the deductible amount.
14. Line 24 – Other adjustments:
    • 24a – Jury duty pay (see instructions)
    • 24b – Deductible expenses related to income reported on line 8l
    • 24c – Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8m
    • 24d – Reforestation amortization and expenses
    • 24e – Repayment of supplemental unemployment benefits under the Trade Act of 1974
    • 24f – Contributions to section 501(c)(18)(D) pension plans
    • 24g – Contributions by certain chaplains to section 403(b) plans
    • 24h – Attorney fees and court costs for actions involving certain unlawful discrimination claims (see instructions)
    • 24i – Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations
    • 24j – Housing deduction from Form 2555
    • 24k – Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041)
    • 24z – Other adjustments (list type and amount):
15. Line 25 – Total other adjustments:
    • Add lines 24a through 24z and enter the total amount.
16. Line 26 – Total adjustments to income:
    • Add lines 11 through 25 and enter the result here and on Form 1040, 1040-SR, or 1040-NR, line 10.