Skip to main content

What is a Schedule 1 Tax Form: Everything You Need To Know

Published March 22, 2021

5 minute read

David Ning

By David Ning

The Schedule 1 tax form might be applicable to you. If it is, it will become part of the standard Form 1040 you fill out every year. You may hear the Schedule 1 form referred to as the “Additional Income and Adjustments to Income Form.” Like that name implies, the form acts as a catch all for any income and adjustments that don’t commonly apply to the majority of tax payers. That’s why the Schedule 1 isn’t commonly mentioned. Most people don’t even need to include it in their tax returns. So exactly what is a Schedule 1 tax form?

At first glance, the Schedule 1 seems to have big changes from year-to-year. The 2018 Schedule 1 had 36 different line items, while last year’s version only had 22. However, a closer inspection reveals that the two forms are basically the same. The exception is that the IRS decided to reserve a whole bunch of line items for the 2018 form that they later got rid of.

What is the Schedule 1 For and What Does It Include?

Many people can live their whole lives without needing to attach a Schedule 1. If that’s you, consider yourself lucky. Some others will need to include it every single year when they file their taxes. That’s because the standard Form 1040 already covers the basic income and adjustments that most individuals receive and qualify for. Then the Schedule 1 rounds up the rest.

The major groups of people who’ll need to attach a Schedule 1 are the following (we split it up by the two sections — Income and Adjustments).

Schedule 1 — Income Section

Divorced Individuals Receiving Alimony

This used to be the simplest on the bunch. You’d simply type in how much alimony you receive and you’re good to go. Now there’s a slight wrinkle — with big tax consequences. As a result of the Tax Cuts and Jobs Act in 2018, alimony is no longer considered for taxes if the separation was filed in 2019 or later. That means that alimony is no longer taxable for the receiver. It is also no longer tax deductible for the payer (again, if the divorced occurred in 2019 and later).

Those who’ve always entered alimony as income should keep on filing it that way. However, recent divorcees can now simply skip over the line and move on. Unless the law changes in the future, it’s expected that this line will become used less and less frequently as alimony payment from past divorces end.

Those With Business Income

This is for anyone who is self-employed or a business owner with multiple multiple employees. Self-employed individuals will attach a Schedule C with profit and loss details, while other business owners with K1s and the like will attach a Schedule E. There’s even a separate line for farmers, who will need to attach a Schedule F.

Those on Unemployment

If you received unemployed benefits during the tax year, then you’ll get a 1099-G form. It will detail the total amount of benefits you received in the tax year. For those who elected to voluntarily have their taxes withheld at the Federal level, that amount will show in Box 4 of the 1099-G. Note that the amount withheld isn’t entered in the Schedule 1 at all. Instead, you put withholding information on the Form 1040, along with all other taxes that were withheld on all types of 1099s for the year.

Schedule 1 — Adjustments Section

Special Expenses for Certain Jobs

Educator, reservists, performing artists, and fee-basis government officials all have special provisions that allow them to deduct some of the expenses they incur while on the job. Educators can deduct unreimbursed expenses such as supplies and computer equipment for up to $250 per individual. The others have even more deductions listed. Attach Form 2106 where the calculations are made.

HSA Contributions

Those who contributed any amount to an HSA can put the amount they added during the tax year to their Schedule 1. The contributions are tax deductible. Remember to include any amount that your employer contributed on your behalf. You have to attach Form 8889 to show your calculations though.

Military Members

Member of the Armed Forces (on active duty) who had to permanently change where they stationed due to a military order can deduct their moving expenses. Attach Form 3903 to figure out the exact amount allowed.

Self-Employed People

Self-employed individuals have several possible deductions on the Schedule 1. Contributions to a SEP, SIMPLE, and other qualified plans such as a Solo 401(k) are all tax deductible and filed under the Schedule 1. Health insurance is deductible for them too, as well as part of the self-employment tax they pay that’s calculated via Schedule SE.

Early Withdrawal Penalties

Let’s say the bank charged you with a penalty for withdrawing your certificate of deposit early. You could at least get some of it back via a tax deduction. You should note, though, that early withdrawal penalties on a 401(k) aren’t tax deductible. That’s because the funds are taken out of the account that were never taxed, so it doesn’t make sense for the IRS to also give you a tax deduction.

Alimony Payers

Those who had to pay alimony payments used to be able to deduct taxes on them. But as discussed earlier, this is no longer the case for separations that were filed from 2019 onward.

IRA Contributions

Those who contributed to a Traditional IRA can enter the deduction here. Adjusted Gross Income (AGI) limits and other contribution limits apply. Be sure to check the rules before you make the deposit into the retirement account.

Students

Students can claim a deduction on their Schedule 1 for student loan interest they had to pay. Certain tuition and fees they had to pay throughout the year are also deductible and calculated via Form 8917.

The Bottom Line

Schedule 1 isn’t complicated to complete. However, it’s important to not forget about it altogether. This isn’t usually a problem in the modern days of electronic tax software where you file your taxes based on a question and answers system. On the other hand, anyone still using paper forms will need to be careful. You don’t want to accidently exclude a huge section of income and adjustments. If you do, your tax return will likely be flagged for an audit.

Tax Form 1040 Schedule 1

Shutterstock

David Ning

Experienced Finance Writer

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs MoneyNing.com, where he discusses every day money issues to encourage the masses to think about their finances more often.

Explore Taxes

Taxes

What Are The New 2021 Tax Brackets?

Each year, the Internal Revenue Service (IRS) updates their marginal income tax rates. In other words, they issue new tax brackets for the year ahead to reflect the ongoing impact of inflation. For 2021, there are seven income tax brackets in the United States: 10%, 12%, 22%, 24%, 32%, 35% and 37%. These will be […]

Read More about Post Title

7 minute read

Taxes

Payroll Tax Deferment Guide: Everything You Need to Know

On March 11, 2021, President Biden signed the American Rescue Plan Act into law. It’s a $1.9 trillion bill that extends many forms of federal assistance for businesses impacted by the Covid-19 pandemic. Two of the provisions found in the ARPT are the employee retention credit and the employer payroll tax deferral. These provisions are […]

Read More about Post Title

3 minute read

Taxes

Reasons Why Your Tax Refund is Delayed

The Internal Revenue Service is currently swamped. Despite that admission, you might still be anxiously waiting for your expected tax refund. The IRS says they have already processed more than 91 million individual returns from 2020. Additionally, more than 68 million refunds have already been issued to taxpayers. However, the agency is still holding more […]

Read More about Post Title

9 minute read

See All In Taxes

More from WalletGenius

Young couple worried about finances Save Money

How To Tell If Your Retirement Is In Jeopardy

One of the most common financial concerns for adults these days is retirement. It comes up over and over again. For anyone concerned about money, retirement is a very big problem to confront. Current (and future) generations of working-aged Americans aren’t exactly fairing well, when it comes to retirement savings. Some studies have shown that […]

Read More about Post Title

7 minute read

Young woman worried about student loans Perkins loans Student Loans

Perkins Loans: Everything You Need To Know

A Perkins Loan was a federal program that provided low-interest loans to college students who demonstrated exceptional financial need. The program, which operated as the “Perkins Loan Program,” no longer exists. It was discontinued on September 30, 2017. The final disbursements were permitted through June 30, 2018. Although the program has been discontinued, many current […]

Read More about Post Title

5 minute read

Capital budgeting paperwork Budgeting

Capital Budgeting: A Complete Guide

Capital budgeting is a business term used to describe the process of determining how to best use the capital the company has on hand. Should they expand? Should they reinvest in a new factory to increase capacity? Is it profitable to acquire another business for expansion? In other words, capital budgeting is the process of […]

Read More about Post Title

7 minute read

Woman checking her credit score Credit

What You Need to Know About Free Credit Scores

You probably know that your credit score is an important aspect of your finances. Your credit score goes beyond just helping you get a loan with a good interest rate. It can also influence your insurance rates and even impact what happens when you sign up for internet or a cell phone plan. Knowing your […]

Read More about Post Title

7 minute read

Budgeting

EBITDA: What Is It and How Is It Calculated?

It might look like it, but EBITDA is not actually an alien word. It is an acronym that stands for “earnings before interest, taxes, depreciation, and amortization.” As you may have guessed by now, it’s a metric used in the business world. A company’s EBITDA can help you better understand their ability to generate cash […]

Read More about Post Title

6 minute read

Trusted provider of accurate rates & financial information