Form 1040 Schedule 1: Additional Income and Adjustments to Income (2020)
What Form 1040 Schedule 1 Is For
Schedule 1 is an attachment to your main tax return—Form 1040, 1040-SR, or 1040-NR—that captures income and deductions that don't fit on the main form itself. Think of it as the "overflow" schedule that ensures nothing falls through the cracks when your tax situation goes beyond basic wages, interest, and standard deductions.
The form has two distinct parts. Part I captures additional income sources beyond what appears on the main form—things like unemployment benefits, business income, gambling winnings, or alimony you received. Part II handles adjustments to income, commonly called "above-the-line deductions," which reduce your adjusted gross income before you claim your standard or itemized deductions. These include educator expenses, student loan interest, contributions to retirement accounts, and self-employed health insurance premiums.
What makes Schedule 1 particularly important is that the adjustments in Part II can benefit you even if you take the standard deduction. Unlike itemized deductions, these adjustments reduce your adjusted gross income directly, which can make you eligible for other tax benefits that have income limits. The total from Part I increases your income on line 8 of Form 1040, while the total from Part II decreases your income on line 10a, directly affecting your taxable income calculation.
When You’d Use Form 1040 Schedule 1 (Late Filing or Amended Returns)
You file Schedule 1 along with your original Form 1040 when you have any of the income types or deductions listed on the form. For 2020 returns, the original deadline was May 17, 2021 (postponed from the usual April 15 due to pandemic relief). If you missed that deadline, you should file as soon as possible to minimize penalties and interest, even though your return is late.
If you've already filed your 2020 return but need to correct or add information related to Schedule 1—perhaps you forgot to claim educator expenses, discovered additional business income, or need to report unemployment compensation you initially overlooked—you'll need to file Form 1040-X, the Amended U.S. Individual Income Tax Return. When filing an amended return, you must include all necessary forms and schedules as if you were filing an original return, which means including a corrected Schedule 1 showing the proper amounts.
For amended returns, timing matters. Generally, you must file Form 1040-X within three years after the date you filed your original return or within two years after the date you paid the tax, whichever is later. For most 2020 returns filed by the May 17, 2021 deadline, this means you have until May 17, 2024 to amend. The IRS now accepts electronically filed amended returns for 2019 and later tax years, which is faster than paper filing. However, amended returns take longer to process than original returns—typically eight to twelve weeks—so patience is required.
Key Rules and Requirements for 2020
Several important rules govern Schedule 1. First, you only file this schedule if you actually have entries to make. If you have no additional income and no adjustments to claim, you simply don't attach Schedule 1 to your return. The IRS doesn't require blank schedules.
For income reporting in Part I, all amounts must be reported in U.S. dollars, and you generally need supporting documentation. If you received a Form 1099-G for state tax refunds or unemployment compensation, those amounts must be reported even if you didn't receive the form. Business income requires Schedule C, rental income requires Schedule E, and farm income requires Schedule F—Schedule 1 just captures the totals from those more detailed forms.
The 2020 tax year included special rules for unemployment compensation. The American Rescue Plan Act, passed in March 2021, allowed taxpayers to exclude up to $10,200 of unemployment compensation from income if their modified adjusted gross income was less than $150,000. This exclusion applied separately to each spouse on a joint return, meaning a married couple could potentially exclude up to $20,400 combined. The instructions included a specific worksheet to calculate this exclusion.
For adjustments in Part II, contribution limits and income phase-outs apply to many deductions. The educator expense deduction maxed out at $250 per eligible educator, or $500 for married couples filing jointly when both spouses qualify. The student loan interest deduction had a maximum of $2,500 and phased out for taxpayers with modified adjusted gross income between $70,000 and $85,000 for single filers, or $140,000 and $170,000 for joint filers.
Certain adjustments require additional forms. Health savings account deductions require Form 8889, moving expenses for Armed Forces members require Form 3903, and the tuition and fees deduction requires Form 8917. You must attach these supporting forms to your return. Additionally, for alimony received or paid, you must enter the date of the original divorce or separation agreement, and for alimony paid, you must provide the recipient's Social Security number.
Step-by-Step (High Level)
Begin by gathering all your income documents—W-2s, 1099 forms, and records of any cash income from business activities, rentals, or other sources. Review these documents to identify income that doesn't appear on lines 1 through 7 of Form 1040. This includes unemployment compensation, business profit or loss, farm income, rental income, prizes, awards, gambling winnings, jury duty pay, and certain other miscellaneous income.
Next, compile records of qualifying adjustments you can claim. Pull together documentation for educator expenses (receipts for classroom supplies), student loan interest statements (Form 1098-E), health insurance premiums if self-employed, contributions to self-employed retirement plans, and any other eligible adjustments. Make sure you understand the requirements and limits for each adjustment you plan to claim.
Complete Part I first, entering amounts on lines 1 through 8. For complex items like business income, rental income, or farm income, you'll need to complete the associated schedules (C, E, or F) first, then transfer the totals to Schedule 1. Calculate the sum of all additional income on line 9, which you'll then transfer to Form 1040, line 8.
Move to Part II and calculate your adjustments to income on lines 10 through 22. Some of these require worksheets found in the Form 1040 instructions—specifically, the IRA deduction, student loan interest deduction, and self-employed health insurance deduction. Complete any required supporting forms like Form 8889 for HSA deductions or Form 2106 for certain employee business expenses. Total all adjustments on line 22 and transfer this amount to Form 1040, line 10a.
Finally, attach Schedule 1 to your Form 1040 in the proper sequence—it's Attachment Sequence No. 01, meaning it goes right after the main form. Make sure you've entered your name and Social Security number at the top of Schedule 1, exactly as they appear on Form 1040. If filing electronically, the tax software will handle the attachment automatically. If filing by paper, place Schedule 1 immediately behind Form 1040.
Common Mistakes and How to Avoid Them
One frequent error involves the unemployment compensation exclusion for 2020. Many taxpayers either forgot to claim it or calculated it incorrectly. Remember that the $10,200 exclusion only applies if your modified adjusted gross income is less than $150,000, and you must use the specific worksheet in the instructions to figure both your modified AGI and the excludable amount. Don't simply subtract $10,200 from the total on your Form 1099-G without working through the calculation.
Another common mistake is claiming adjustments without proper documentation or without meeting all requirements. For the student loan interest deduction, the loan must be a qualified student loan taken out solely to pay qualified education expenses, and you can't be claimed as a dependent on someone else's return. For the self-employed health insurance deduction, the insurance plan must be established under your business, and you can't claim this deduction for months when you were eligible to participate in an employer plan (including your spouse's employer).
Taxpayers frequently make math errors when totaling Part I and Part II, or when transferring amounts to the main Form 1040. Double-check your addition on lines 9 and 22, and verify that you've correctly entered these totals on Form 1040 lines 8 and 10a respectively. Electronic filing virtually eliminates these calculation errors since the software does the math automatically.
Missing or incorrect Social Security numbers create processing delays. If you're claiming the alimony paid deduction, you must provide your former spouse's Social Security number on line 18b. Failure to do so will result in the deduction being disallowed. Similarly, make sure your own Social Security number at the top of Schedule 1 matches exactly what's on your Social Security card and Form 1040.
Finally, don't overlook the requirement to attach supporting schedules and forms. Schedule 1 often serves as a summary, with the detailed calculations happening elsewhere. Business income requires Schedule C, self-employment tax requires Schedule SE, health savings account deductions require Form 8889, and so on. Filing Schedule 1 without these required attachments will result in processing delays and potentially a notice from the IRS requesting the missing information.
What Happens After You File
Once you submit your return with Schedule 1 attached, the IRS begins processing. E-filed returns generally process within 21 days, while paper returns can take six weeks or longer. During processing, the IRS computers perform initial checks to verify your math, ensure required forms are attached, and compare reported income against information returns they've received from employers, banks, and other payers.
You can check your refund status using the "Where's My Refund?" tool on IRS.gov starting 24 hours after e-filing or four weeks after mailing a paper return. This tool shows three stages: return received, refund approved, and refund sent. For 2020 returns that claimed the Earned Income Tax Credit or Additional Child Tax Credit, the IRS couldn't issue refunds before mid-February 2021 due to legal requirements designed to prevent fraud.
If the IRS finds an error or has questions about your return, they'll send you a notice. Common issues include math errors (which they'll correct automatically and send you an explanation), missing forms or schedules, or discrepancies between what you reported and what their records show. If they make a change that affects your tax, you'll receive a notice explaining the adjustment and showing any additional amount you owe or refund you'll receive.
For returns that claim certain credits or deductions requiring additional scrutiny—such as the Earned Income Tax Credit, business losses, or large charitable contributions—the IRS may select your return for examination. This doesn't necessarily mean you did anything wrong; returns are selected through various methods including random sampling and computer screening. If selected, you'll receive a notice explaining what information they need and how to respond.
If you file an amended return on Form 1040-X to correct Schedule 1 information, the process takes longer—typically eight to twelve weeks. You can check the status of your amended return using the "Where's My Amended Return?" tool on IRS.gov starting three weeks after filing. Unlike original returns, amended returns undergo more manual review, which explains the longer processing time. If the amendment results in an additional refund, the IRS will issue a separate check once processing is complete.
FAQs
Do I need to file Schedule 1 if I only have W-2 income and take the standard deduction?
No, Schedule 1 is only required when you have additional income beyond what's reported directly on Form 1040 or when you claim adjustments to income. If your only income is wages shown on Form W-2 and you're taking the standard deduction without claiming any adjustments, you can file Form 1040 without Schedule 1.
Can I claim the educator expense deduction if I'm a teacher who worked from home during the pandemic?
Yes, if you're an eligible educator—a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked at least 900 hours during the school year—you can deduct up to $250 of qualified expenses. For 2020, the CARES Act expanded qualifying expenses to include personal protective equipment, disinfectant, and other supplies used to prevent the spread of coronavirus. You don't need to itemize to claim this deduction.
What happens if I received unemployment benefits in 2020 but already filed my return before the unemployment exclusion was enacted?
The American Rescue Plan Act was passed in March 2021, after many people had already filed their 2020 returns. The IRS announced it would automatically refund money to eligible taxpayers who filed before the law changed, so most people didn't need to file an amended return for this specific issue. However, if you believe you qualify but didn't receive an adjustment, you can file Form 1040-X to claim the exclusion, provided you're within the three-year window for amended returns.
If I'm self-employed, what's the difference between the deduction for self-employment tax on line 14 and the business expenses I deduct on Schedule C?
Schedule C captures your business income and expenses to calculate your net profit or loss—that's the profit subject to both income tax and self-employment tax. Line 14 of Schedule 1 then lets you deduct one-half of your self-employment tax (calculated on Schedule SE) as an adjustment to income. This prevents double taxation since the employer portion of these taxes isn't taxable income for employees. Think of it as two separate deductions: Schedule C reduces your business profit, and Schedule 1 line 14 further reduces your adjusted gross income by half of the resulting self-employment tax.
Can I claim both the student loan interest deduction and education credits in the same year?
Yes, these are separate tax benefits with different rules. The student loan interest deduction on Schedule 1, line 20, is for interest you paid on qualified student loans and is limited to $2,500. Education credits like the American Opportunity Credit or Lifetime Learning Credit, reported on Schedule 3, are for qualified tuition and related expenses you paid during the tax year. You can claim both if you meet the requirements for each, though you generally can't claim the tuition and fees deduction (Schedule 1, line 21) and an education credit for the same student in the same year.
Do I need to report gambling winnings even if I lost money overall when gambling?
Yes, you must report all gambling winnings on Schedule 1, line 8. Gambling losses can only be deducted as an itemized deduction on Schedule A, and only up to the amount of your winnings—you can't create a net loss. This means if you take the standard deduction, you'll pay tax on your winnings without any offset for losses. If you itemize, you can deduct losses up to the amount of winnings, but you need to keep detailed records of both wins and losses including receipts, tickets, statements, and a diary of your gambling activities.
If I paid alimony under a divorce agreement from 2015, can I still deduct it on Schedule 1?
Yes, alimony paid under a divorce or separation agreement executed on or before December 31, 2018 remains deductible, as long as the agreement wasn't modified after that date to expressly state that alimony isn't deductible. You must provide your former spouse's Social Security number and the date of the original divorce or separation agreement on Schedule 1, lines 18a through 18c. Agreements executed after December 31, 2018 follow different rules—alimony isn't deductible for the payer and isn't taxable for the recipient.
Sources: IRS Form 1040 Schedule 1 (2020), IRS Form 1040 Instructions (2020)
