Tax Forms: Schedule 1

Content provided for general information. Talk to your advisor to confirm the details for your specific situation before taking action.

Schedule 1 contains various types of income and adjustments to income that don’t fit on Form 1040 itself.

What’s the point of Schedule 1?

Schedule 1 is one of the most pointless tax forms there is. Almost everything on it used to be directly on Form 1040.

Congress and the IRS got the idea in their head that people should be able to file their taxes on a postcard. So they wanted to make Form 1040 as short as possible.

What they didn’t do is anything to actually make filing taxes easier. So all of the things they had to take off of Form 1040 to make things shorter had to go somewhere else.

Schedule 1 got Additional Income (Part I) and Adjustments to Income (Part II).

What is Additional Income?

Form 1040 has mainly three categories of income:

  • Employment wages and tips
  • Investment income
  • Retirement income

Additional Income on Schedule 1 includes:

  • Refunds and credits of state taxes that you took a deduction for. If you pay state taxes, take a deduction for that tax, and later get some of what you paid back, you don’t get to keep your federal deduction on the money you got back.
  • Alimony but it’s only taxable if you have an old alimony agreement that follows the old tax law.
  • Business income from Schedule C. This will be your net profit after your business expenses.
  • Gain or loss from Form 4797. This is certain types of business properties.
  • Income from rental real estate, royalties, partnerships, S-Corporations, trusts, and certain other activities. This will usually be from Schedule K-1.
  • Farm income from Schedule F.
  • Unemployment income
  • Net operating losses
  • Gambling income (See Gambling Taxes)
  • Canceled debt
  • Foreign earned income exclusion
  • Medical savings account distributions (Form 8853)
  • Health savings account distributions (Form 8889)
  • Alaska Permanent Fund dividends
  • Jury duty pay
  • Prizes and awards
  • Hobby income (see Hobby Taxes)
  • Various other forms of income that apply to a very small number of people

The big thing to remember is that any form of income you receive is taxable unless the law says it isn’t. So if you received some other type of income, you probably have to pay taxes on it.

Adjustments to Income

Adjustments to Income are more commonly known as above-the-line deductions. These are deductions that reduce your Adjusted Gross Income.

The most common ones are:

  • Educator expenses
  • Health Savings Account deduction
  • Military moving expenses
  • Deductible self-employment tax
  • Self-employed retirement plan contributions
  • Self-employed health insurance deduction
  • IRA deduction
  • Student loan interest deduction

Where do I get my Schedule 1 tax document?

Schedule 1 is an IRS document that you have to fill out. You don’t get it from the company that paid you like you do with a W-2 or 1099.

To get a copy of any IRS form, visit the IRS website and type the name of the form into their search bar. You can also download Schedule 1 here.

But normally you don’t need to go out and get Schedule 1.

If you use tax filing software, it will ask you questions about your income and expenses. If you need a Schedule 1, it will automatically create one for you.

If you hire a tax professional to do your taxes, he will also fill out Schedule 1 for you.

If you’re looking for Schedule 1 after you filed, it will usually be on the third page of your tax return or close to the front. It has SCHEDULE 1 in big letters in the top left corner.

Does everyone have a Schedule 1?

There are so many things on Schedule 1 that most people will have one. If you don’t have a Schedule 1, it doesn’t really change anything as long as you did your taxes correctly.

Do I need Schedule 1 for FAFSA?

FAFSA does ask for Schedule 1. It provides additional information about your family’s financial situation that isn’t found on Form 1040 or by using your Adjusted Gross Income.

If you or your parents didn’t file a Schedule 1, check the box that says you did not. If you’re not sure, check “don’t know” and your financial aid department may contact you for additional information if needed.

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