Report additional income and adjustments on Schedule 1

What is Schedule 1?

Schedule 1 is a tax form that was created as part of the 2018 tax reforms, which eliminated Forms 1040A and 1040-EZ. The reforms created a mandate that all taxpayers use Form 1040, Schedule 1, to report certain types of income, plus deductions known as adjustments.

Taxpayers still report the most common types of income, such as wages, Social Security benefits, pensions, and interest and dividends, on the first page of Form 1040. All other income sources are labeled as "additional income," and taxpayers need to report them on Schedule 1. All adjustments, such as the student loan interest deduction and one-half of self-employment tax deductions, are now reported on Schedule 1, as well.

Additional Income

Lines 1 through 9 in Part I are dedicated to reporting additional income types that are no longer reported on the front page of Form 1040.

• Line 1: Report taxable refunds, credits, or offsets of state and local income taxes on this line, in situations such as deducting state income taxes on Schedule A. This can result in all or part of your state tax refund being included in taxable income in the next year. When you itemize deductions and claim state and local withholdings and taxes paid, you may have to claim all or part of your state tax refund as income the following year.
• Lines 2a and 2b: Alimony that was entered into before 2018 may create taxable income. On Line 2b, enter the official date of divorce or separate maintenance agreement. Do not include amounts you received for child support, because child support isn’t taxable income and is considered first in payments made by your former spouse.
• Line 3: Report business income or loss on Schedule C, which you need to file for self-employment income, such as freelancing, gig work, and having your own business.
• Line 4: Report gain or loss on the sale or disposition of assets that were part of your Schedule C business or Schedule F farm income on Form 4797.
• Line 5: Report supplementary income from Schedule E. This includes royalty income, rental activity, and earnings from partnerships and S corporations.
• Line 6: Report farming income or loss from Schedule F.
• Line 7: Report unemployment compensation from Form 1099-G.
• Line 8: Report other types of income here that are not listed above or on the front page of Form 1040. Sources include jury duty pay, prizes and awards, and gambling income, among other types.
• Line 9: Add these items together, then carry that amount to Line 8 of Form 1040.

Adjustments (above-the-line deductions)

Lines 10 through 22 in Part I are dedicated to reporting adjustments that are no longer reported on the front page of Form 1040.

• Line 11: Report qualified educator expenses of up to $300 per eligible K-12 educator. For 2023, the dollar limit still applies, but this deduction has been expanded to include protective gear, plastic dividers, face shields, and other items needed to mitigate coronavirus in classrooms.
• Line 12: Report employee business expenses claimed on Form 2106 if you are an eligible performing artist, military reservist, or fee-basis government official.
• Line 13: Report contributions to health savings accounts from Form 8889.
• Line 14: The job-related moving expense deduction has been suspended for most people until 2025. Members of the armed forces can still claim this deduction on Form 3903 and carry the amount to this line.
• Line 15: Report one half of self-employment tax that you calculated on Schedule SE as an adjustment.
• Line 16: Report self-employed retirement contributions, such as SEP, SIMPLE, and solo 401(k) plans, on this line.
• Line 17: Deduct medical and dental insurance premiums paid by self-employed taxpayers for themselves, their spouses, and dependents.
• Line 18: Deduct penalties or forfeited interest and principal on long-term obligations, such as certificates of deposit, in full as an adjustment.
• Lines 19a through 19c: If you have paid alimony, it might be deductible. Report the recipient's Social Security number on Line 18b and the date of the divorce decree or separate maintenance agreement on Line 18c. If the divorce was finalized or changed after Dec. 31, 2018, the alimony may not be deductible. Do not include amounts you paid for child support, because they are not deductible.
• Line 20: Deduct contributions to a traditional IRA.
• Line 21: Deduct student loan interest for taxpayers who fall under certain income limits.
• Line 22: This line is not in use at this time.
• Line 23: Include any amounts you contributed to an Archer MSA account.
• Line 24: Lines 24a – 24k are less commonly used deductions, and line 24z is for deductions not already listed.
• Line 25: Add up Lines 24a – 24k and 24z.
• Line 26: Report the total adjustments here and transfer this amount to Line 10 of Form 1040 or 1040-SR.

Confused? We can help. A Jackson Hewitt Tax Pro can explain this form and help you fill it out, with any supporting documentation or calculations you may need. Taxes can be complicated, but you are not on your own. Contact us today.

About the Author

Mark Steber is Senior Vice President and Chief Tax Information Officer for Jackson Hewitt. With over 30 years of experience, he oversees tax service delivery, quality assurance and tax law adherence. Mark is Jackson Hewitt’s national spokesperson and liaison to the Internal Revenue Service and other government authorities. He is a Certified Public Accountant (CPA), holds registrations in Alabama and Georgia, and is an expert on consumer income taxes including electronic tax and tax data protection.

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