IRS Schedule 1: What You Need to Know to Do Your Taxes

Here's line-by-line guidance on this new tax form.

Dan Caplinger
Dan Caplinger
Mar 13, 2019 at 9:03AM
Investment Planning

Tax season is here, and taxpayers have a whole new set of forms to deal with in preparing their returns. For some, the new, shorter 1040 is a big relief from the old long form, while others who are used to even simpler tax returns are feeling the pressure from the new format.

The new 1040 also has a number of brand-new schedules that have to get attached to your return in many cases. Schedule 1 includes both additional income and downward adjustments to your income, and while not everyone will have to use the schedule, anyone can -- and doing so can give you some valuable tax benefits. Let's take a line-by-line look at the new Schedule 1 to understand it better.

Keyboard with blue tax button.

Image source: Getty Images.

Lines 1-22: Additional income

The regular 1040 form includes the most common types of income that most taxpayers have. Wage and salary income, investment income from interest and dividends, and Social Security and retirement plan distributions all have lines of their own on the main 1040.

However, there are many other types of income that didn't make the cut for the shorter 1040, and they got shunted over to Schedule 1. They include:

  • State or local tax refunds you received for which you claimed a deduction the previous year, on line 10.
  • Taxable alimony you received pursuant to a divorce decree, on line 11.
  • Business income from an enterprise that you run, on line 12.
  • Capital gains or losses from investments, on line 13.
  • Gains from sales of business property, on line 14.
  • Income from rental property, royalty interests, or pass-through entities like partnerships and S corporations, on line 17.
  • Farm income, on line 18.
  • Taxable unemployment benefits, on line 19.

In addition, any other income that doesn't fall into those broad categories but is still taxable goes on the catch-all line 21.

IRS 2018 Schedule 1.

Image source: IRS.

Add up all the extra income from these lines, and you'll have an amount that you'll port over to the appropriate line on your main 1040 form.

Lines 23-36: Adjustments to income

The rest of Schedule 1 goes toward reductions to your gross income. These fall into many different and unrelated categories, but they all serve to save you in taxes by reducing the amount of income that gets taxed. They include the following:

  • Line 23 lets teachers and other educators deduct up to $250 in money they spend out-of-pocket toward classroom expenses.
  • Line 24 gives members of armed forces' reserves, performing artists, and certain government workers the ability to deduct employee business expenses as an adjustment to gross income.
  • Line 25 allows those using health savings accounts to deduct their contributions.
  • Line 26 is for the moving expense deduction, which is now limited only to members of the armed forces.
  • Lines 27, 28, and 29 are geared toward self-employed individuals. Line 27 has a deduction for the self-employment tax that's due, treating those taxpayers the same as employees and their employers. Line 28 includes contributions that the self-employed make to retirement plans created specifically for their businesses, while line 29 lets the self-employed deduct certain health insurance expenses.
  • Line 30 includes a deduction for any early withdrawal penalties paid on certificates of deposit at banks.
  • Line 31a lets those who pay alimony claim a deduction for those payments, with a space to include the Social Security number for the person to whom the taxpayer is paying that alimony.
  • Line 32 is where you can put a deductible contribution to a traditional IRA.
  • Line 33 includes deductible student loan interest.

You'll add up all those amounts on line 36 and then use that figure on the main 1040 form.


Related Articles

Schedules for less common tax provisions

The philosophy that the new tax form structure uses is to put the most common provisions on the main 1040 form while leaving rarer items on schedules. Schedule 1 will be a common form that many taxpayers use, and by knowing the available deductions from income that are available even if you take the standard deduction, you'll be better able to pay as little in tax as possible.