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This article was fact-checked by our editors and a member of the Credit Karma Tax® product specialist team, led by Senior Manager of Operations Christina Taylor. It has been updated for the 2020 tax year.
It’s not unusual to find you need to complete and file more forms than just a 1040 when you do your federal income taxes. One form you may encounter is Schedule 1.
Schedule 1 covers some common tax situations. For example, if you paid student loan interest during the year, won money gambling or earned income from rental properties you own, you may need to file this Schedule 1 with your 1040.
Software and online filing services usually complete your 1040 automatically and any additional forms you need based on the information you input. Still, it’s a good idea to know how these forms work, and even more so if you’ll be filing a paper tax return.
- What is IRS Schedule 1?
- Why do I have to file an IRS Schedule 1?
- What information is on an IRS Schedule 1?
- How should I fill out an IRS Schedule 1?
A lot of the information on Schedule 1 used to be on the old Form 1040, like business income and health savings account, or HSA, deductions. But the revised Form 1040 took information from the old 1040 and moved it to a series of new forms, called schedules.
On Schedule 1, you’ll report types of income that aren’t listed on the 1040, such as capital gains, unemployment payments and gambling winnings. On the 1040, you can only enter common types of income. These include W-2 wages, tax-exempt interest, qualified dividends, Social Security benefits and payments from IRAs, pensions and annuities.
Schedule 1 also includes some common adjustments to income, like the student loan interest deduction and deductions for educator expenses. These were “above-the-line” deductions on the old 1040 — you could claim those adjustments to income and take the standard deduction without having to itemize all your deductions.
Not everyone will have to file a Schedule 1. The intention behind trimming down the old Form 1040 was to simplify the main form and allow people to add on schedules as needed.
You need to file an IRS Schedule 1 only if any of the situations on the form apply to you. If you want to take an adjustment to income that’s not listed on the main Form 1040, or if you received a type of income during the tax year that’s not listed on the 1040, you may need to complete and submit Schedule 1 with your 1040 when you file your federal income tax return.
Keep in mind that certain items included on Schedule 1 may also mean you have to file additional forms. For example, if you have business income you need to attach Schedule C or C-EZ. Income from an S corporation will mean you’ll also need to file Schedule E, Supplemental Income and Loss. And if you have income or a loss from farming, you’ll need to file Schedule F in addition to Schedule 1.
Schedule 1 includes information on the following types of income:
- Tax credits, taxable refunds, or other offsets for state or local income taxes
- Alimony you received
- Business income or loss (you’ll also need to include Schedule C or Schedule C-EZ)
- Capital gains or losses, like if you bought or sold stocks
- Income from rental real estate
- Income from a business partnership, S-corporation or trust (you’ll also need to include Schedule E, Supplemental Income and Loss)
- Farm income or loss (you’ll also need to file Schedule F)
- Unemployment payments
- Any other income, like gambling or prize winnings, and you’ll need to specify the type and amount
Additionally, Schedule 1 contains information on the following adjustments to income:
- Educator expenses
- Certain business expenses for performing artists, fee-based government officials or reservists
- HSA contributions
- Self-employment tax
- Self-employment retirement plan contributions, such as SEP IRAs or SIMPLE IRAs
- Health insurance if you’re self-employed
- Early withdrawal penalty on savings
- Alimony paid
- Student loan interest
- Certain other IRA contributions
Because Schedule 1 is used to report adjustments to your income and any additional income you earned that isn’t reported on the main Form 1040, the information on it can affect your taxable income. Because your taxable income determines your tax bracket and marginal tax rate, reducing your taxable income may help reduce your total tax obligation — and maximize any tax refund you may be owed.
The Schedule 1 form is split up into two parts: Additional Income and Adjustments to Income, or deductions.
First, go through the Additional Income section (lines 1–9) and fill out any numbers that apply to you. You may have received forms that’ll provide you numbers to enter in here, like a Form 1099-G if you received unemployment compensation.
Next, go through the Adjustments to Income section (lines 10–22) and do the same thing. You may also have received tax forms with numbers you can report here, like a Form 1098-E if you paid interest on a qualified student loan.
Once you finish these two sections, tally up the numbers as listed and record the results back on Form 1040.
A tax preparer should let you know if you need to file Schedule 1 and what they’ll charge to prepare it for you.
Alternatively, tax preparation software will usually complete Schedule 1 for you, although some may charge a fee for forms in addition to the 1040. You can check out Credit Karma Tax® to prepare and file your federal income tax returns — it’s always free to use the online tax preparation and filing service.
Relevant sources: IRS Tax Tip: There Are Six New Schedules Some Taxpayers Will File with the New Form 1040 | IRS: Schedule 1, Form 1040 and 1040-SR — 2019 | IRS: Form 1040 — U.S. Individual Tax Return | IRS: Schedule 1, Form 1040 and 1040-SR — 2018 | IRS: Schedule 1, Form 1040 and 1040-SR — 2017 | IRS: Schedule E, Form 1040 and 1040-SR — 2019 | IRS: Unemployment Compensation | IRS: Instructions for 1099-G | U.S. Department of Education: 1098-E Tax Form | IRS: About Form 1098-E, Student Loan Interest Statement
Christina Taylor is senior manager of tax operations for Credit Karma Tax®. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She co-developed an online DIY tax-preparation product, serving as chief operating officer for seven years. She is an Enrolled Agent, the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.