Form 1040 Schedule 1: Additional Income and Adjustments to Income (2018)
What Form 1040 Schedule 1 Is For
Schedule 1 (Form 1040) is an attachment to your main tax return that serves two critical purposes: reporting types of income not shown directly on Form 1040 and claiming certain deductions to reduce your taxable income. This schedule was introduced in 2018 as part of the redesigned Form 1040, which replaced the older Forms 1040A and 1040EZ.
The form is divided into two main parts. The first section, ""Additional Income"" (lines 10-21), captures earnings and income sources such as business income, capital gains, unemployment compensation, alimony received, and miscellaneous income like prizes, awards, or gambling winnings. These amounts get added to your total income. The second section, ""Adjustments to Income"" (lines 23-36), allows you to subtract certain expenses and payments—often called ""above-the-line"" deductions because they reduce your income before you calculate your adjusted gross income (AGI). These adjustments include educator expenses, self-employment tax deductions, health savings account contributions, student loan interest, IRA contributions, and self-employed health insurance premiums.
Not everyone needs to file Schedule 1. You only attach it if you have income beyond wages, interest, and dividends, or if you qualify for any of the adjustments listed. If your tax situation is straightforward—for example, you only have W-2 wages and take the standard deduction—you can file Form 1040 by itself without any schedules. Schedule 1 essentially captures the items that used to appear in the middle sections of the old Form 1040 before the 2018 redesign.
IRS Form 1040 Instructions 2018
When You’d Use Schedule 1
You'll use Schedule 1 when filing your original 2018 tax return if you have additional income to report or adjustments to claim. The deadline for the 2018 tax return was April 15, 2019 (or April 17, 2019 for residents of Maine and Massachusetts due to state holidays). If you missed that deadline, you can still file a late return—there's no statute of limitations on filing if you're owed a refund, though you generally have three years from the original due date to claim it.
For amended returns, Schedule 1 becomes relevant when you need to correct additional income or adjustments that were omitted or incorrectly reported on your original return. You would file Form 1040-X (Amended U.S. Individual Income Tax Return) and include a corrected Schedule 1 showing the proper amounts. Common reasons for amending include discovering you forgot to report unemployment compensation, realizing you qualified for educator expenses or student loan interest deductions you didn't claim, or receiving a corrected Form 1099 after you filed.
The Taxpayer Certainty and Disaster Tax Relief Act of 2019 also created situations where taxpayers needed to file amended 2018 returns with Schedule 1. This retroactive legislation extended certain tax benefits that had expired, such as the tuition and fees deduction and the mortgage insurance premium deduction. Eligible taxpayers who couldn't claim these benefits on their original returns were advised to file Form 1040-X to claim them later.
If you received an automatic six-month filing extension using Form 4868, your extended deadline would have been October 15, 2019 (or October 17, 2019 for Maine and Massachusetts). Schedule 1 would still be part of your extended return if applicable. Remember that an extension to file is not an extension to pay—any taxes owed were still due by the original April deadline to avoid interest and penalties.
IRS Form 1040 Instructions 2018
Key Rules or Details for 2018
Several important rules govern Schedule 1. First, all amounts must be reported in whole dollars—you round down amounts under 50 cents and round up amounts of 50 cents or more. Second, you must attach any supporting schedules and forms referenced on Schedule 1, such as Schedule C for business income, Schedule D for capital gains, Form 8889 for health savings accounts, or Form 2106 for certain employee business expenses.
For the Additional Income section, you must report all taxable income even if you didn't receive a Form 1099 or other information return. This includes casual income like jury duty pay, gambling winnings, and prizes. If you received state or local tax refunds shown on Form 1099-G but didn't itemize deductions in the prior year when you paid those taxes, the refund may not be taxable—but you still need to determine this using the worksheet in the instructions. Alimony received is only taxable if it's from a divorce or separation agreement executed before 2019; post-2018 agreements operate under different rules.
The Adjustments to Income section has specific requirements for each deduction. Educator expenses are limited to $250 per eligible educator ($500 if married filing jointly and both spouses are educators). To qualify, you must work at least 900 hours during the school year as a teacher, instructor, counselor, principal, or aide in a school serving kindergarten through grade 12. For 2018, moving expenses are only deductible for members of the Armed Forces on active duty moving due to a military order for a permanent change of station.
Self-employed individuals have several adjustments available: one-half of self-employment tax, contributions to SEP, SIMPLE, or qualified retirement plans, and health insurance premiums paid for yourself, your spouse, and dependents. However, you can't claim the self-employed health insurance deduction for any month you were eligible to participate in an employer-subsidized health plan through your or your spouse's employer.
Student loan interest is deductible up to $2,500, but the deduction phases out at higher income levels. The IRA deduction has complex rules depending on whether you or your spouse are covered by a retirement plan at work, your filing status, and your modified adjusted gross income. Detailed worksheets in the instructions help you calculate these phase-outs. For alimony paid (line 31a), you must enter the recipient's Social Security number—failure to provide this information can result in disallowance of the deduction and potential penalties.
IRS Form 1040 Instructions 2018
Step-by-Step (High Level)
Begin by determining whether you need Schedule 1 at all. Review your income sources and potential adjustments. If you only have wages from Form W-2, interest and dividends, and Social Security benefits, and you're not claiming any adjustments to income, you don't need Schedule 1.
If you do need it, start with the Additional Income section (lines 10-21). Work through each line that applies to you. For line 10, use the worksheet in the instructions to determine if your state or local tax refund is taxable. For line 11, enter alimony received if applicable. Line 12 requires Schedule C or C-EZ if you had business income or loss. Line 13 connects to Schedule D and Form 8949 for capital gains and losses—complete those forms first, then transfer the result to line 13. If you had rental real estate or partnership income, you'll report it on Schedule E and transfer the amount to Schedule 1, line 17.
Line 19 is for unemployment compensation shown on Form 1099-G. Line 21 is a catch-all for other types of income not covered elsewhere. On the dotted line next to line 21, specify the type and amount of each item, such as ""Gambling winnings $2,350"" or ""Jury duty pay $120."" After completing all applicable income lines, add them together and enter the total on line 22.
Next, move to the Adjustments to Income section (lines 23-36). For line 23, calculate eligible educator expenses—this is limited to qualified expenses for books, supplies, computer equipment, and other materials used in the classroom, minus any non-taxable reimbursements. For line 25, you'll need to complete Form 8889 first to determine your health savings account deduction. Line 27 requires you to complete Schedule SE to calculate self-employment tax, then enter one-half of that amount here.
Lines 32 and 33 require worksheets found in the instructions. The IRA deduction worksheet accounts for whether you're covered by a retirement plan at work and applies the appropriate income phase-out ranges. The student loan interest deduction worksheet similarly applies income limits and ensures you're not claimed as a dependent on someone else's return (which would disqualify you).
After completing all applicable adjustment lines, add lines 23 through 35 and enter the total on line 36. This total flows to Form 1040, line 8a (in the 2018 version), where it reduces your total income to arrive at your adjusted gross income. Make sure you've attached all required forms and schedules, then sign and date your return.
IRS Form 1040 Instructions 2018
Common Mistakes and How to Avoid Them
One of the most frequent errors is forgetting to attach required supporting forms and schedules. Schedule 1 often references other forms like Schedule C, Schedule D, Form 8889, or Form 2106. The IRS cannot process your return properly if these are missing. Before mailing or e-filing, double-check that you've included everything referenced on your Schedule 1.
Another common mistake involves incorrectly reporting state tax refunds on line 10. Many taxpayers automatically assume their refund is taxable and enter the full amount from Form 1099-G. However, if you didn't itemize deductions in the prior year, or if you received the Alternative Minimum Tax benefit from your state tax deduction, some or all of that refund may not be taxable. Always use the State and Local Income Tax Refund Worksheet in the instructions to determine the correct taxable amount.
For self-employed individuals, a typical error is claiming the full amount of self-employment tax on line 27 rather than one-half. Schedule SE calculates your total self-employment tax, but only 50 percent of that amount is deductible as an adjustment to income. Similarly, for self-employed health insurance (line 29), people sometimes claim premiums for months when they were eligible for employer coverage—this portion isn't deductible.
Missing or incorrect Social Security numbers cause processing delays and can result in denied deductions. Line 31b requires the recipient's SSN when claiming an alimony deduction. If you leave this blank or enter an incorrect number, the IRS will likely disallow your deduction and may assess penalties. Verify SSNs carefully before filing.
Math errors are remarkably common, especially when totaling lines 23-36 for the adjustments section or when transferring amounts from other forms. Electronic filing software automatically performs these calculations and catches math errors before submission, which is why e-filing generally results in fewer processing issues. If you're filing on paper, double-check all addition and subtraction, and make sure amounts transferred from supporting schedules match exactly.
Finally, many taxpayers overlook deductions they qualify for, particularly educator expenses, student loan interest, and IRA contributions. Review all the adjustments carefully even if you've never claimed them before—your circumstances may have changed. The instructions include worksheets and detailed eligibility requirements to help you determine what you can claim.
IRS Form 1040 Instructions 2018
What Happens After You File
Once you file your return with Schedule 1 attached, the IRS processes it to verify the information and calculate your refund or balance due. Electronic returns typically process within 21 days, while paper returns take approximately four to six weeks. You can check your refund status using the ""Where's My Refund?"" tool on IRS.gov or through the IRS2Go mobile app. You'll need your Social Security number, filing status, and the exact refund amount to access this information.
The IRS matches the income you reported on Schedule 1 against information returns filed by third parties—Forms 1099, W-2, 1098, and others. If there's a discrepancy, you may receive a notice asking for clarification or proposing a change to your return. This doesn't necessarily mean you made an error; sometimes the IRS receives duplicate forms or incorrect information from payers. If you receive a notice, respond promptly with any documentation supporting the amounts you reported.
Your adjustments to income will be reviewed as part of the overall return. If the IRS questions a deduction, they'll send a letter requesting documentation. For example, if you claimed educator expenses, they might ask for receipts showing qualifying purchases. For IRA deductions, they may verify contribution limits and phase-out calculations. Keep all supporting records for at least three years from the date you filed your return or two years from the date you paid the tax, whichever is later.
If you're due a refund, it will be issued once processing is complete, either by direct deposit (typically arriving within 21 days for e-filed returns) or by paper check (taking several additional weeks). However, your refund may be offset if you owe past-due federal or state taxes, child support, student loan debt, or certain other federal non-tax obligations. The Bureau of the Fiscal Service handles these offsets and will send you a notice explaining any reduction in your refund.
If you owe additional tax, the IRS will send a bill if your payment was insufficient. Interest and penalties may apply if you filed or paid late. Conversely, if the IRS finds an error in your favor, they'll send you an additional refund along with an explanation of the adjustment.
In some cases, your return may be selected for audit. Audits can be conducted by mail or in person and typically focus on specific items that seem unusual or disproportionate to your income. Items on Schedule 1 that commonly trigger additional scrutiny include large business losses, substantial gambling winnings without corresponding losses, and significant deductions for self-employed expenses. If you're audited, having thorough documentation for all Schedule 1 items will make the process much smoother.
IRS Form 1040 Instructions 2018
FAQs
Do I need to file Schedule 1 if I only have W-2 wages?
No, if your only income is from wages reported on Form W-2 and you're not claiming any adjustments to income like IRA contributions or student loan interest, you don't need Schedule 1. You can file Form 1040 by itself. Schedule 1 is only required when you have additional types of income beyond what's reported directly on Form 1040 lines, or when you're claiming one of the deductions listed in the adjustments section.
What's the difference between deductions on Schedule 1 and deductions on Schedule A?
Schedule 1 contains ""above-the-line"" deductions, also called adjustments to income. These reduce your adjusted gross income (AGI), which is beneficial because many tax benefits phase out at higher AGI levels. You can claim these adjustments whether you take the standard deduction or itemize. Schedule A, on the other hand, contains itemized deductions—you must choose between itemizing or taking the standard deduction. For 2018, the standard deduction was substantially increased, making Schedule A less common than in prior years.
Can I claim educator expenses if I teach at a private school or homeschool my children?
You can claim educator expenses if you teach at a private school, as long as it provides elementary or secondary education as determined under state law. However, homeschool teachers cannot claim this deduction, nor can college or university instructors. The school must serve students in kindergarten through grade 12, you must work at least 900 hours during the school year, and you must be a teacher, instructor, counselor, principal, or aide.
What happens if I forget to include Schedule 1 with my return?
If you mail a paper return without Schedule 1 when it's needed, the IRS will likely send you a letter requesting the missing schedule, which delays your refund. To avoid this, file electronically—e-filing software automatically includes all necessary schedules. If you already filed without Schedule 1 and realize you need it to report income or claim deductions, you'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return) with the corrected Schedule 1 attached.
Are gambling losses deductible on Schedule 1?
No, gambling losses are not deductible on Schedule 1. Gambling winnings must be reported as income on Schedule 1, line 21, but gambling losses can only be deducted as an itemized deduction on Schedule A, and only up to the amount of your winnings. You cannot use gambling losses to reduce your income below zero or to create a net loss. This creates a situation where casual gamblers who take the standard deduction must report their winnings as income but cannot deduct their losses.
If I'm self-employed, which business expenses go on Schedule 1 versus Schedule C?
Schedule C is where you report all your business income and the ordinary and necessary expenses of running your business—things like supplies, advertising, rent, utilities, and professional fees. The net profit or loss from Schedule C then transfers to Schedule 1, line 12. Schedule 1's adjustment section (lines 23-36) is where you deduct certain costs related to being self-employed but not directly attributable to operating the business: one-half of your self-employment tax (line 27), contributions to your own SEP or SIMPLE retirement plan (line 28), and health insurance premiums for yourself and your family (line 29).
Can I deduct student loan interest if someone else makes the payments for me?
Generally, no. To deduct student loan interest, you must be legally obligated to pay the loan and you must actually pay it. If someone else makes payments on your behalf—for example, your parents pay your student loan—you cannot claim the deduction. There is a narrow exception: if someone makes a payment for you as a gift, the IRS treats it as though they gave you the money and you then made the payment, allowing you to claim the deduction. However, if they pay the lender directly pursuant to their own obligation (such as a parent PLUS loan they took out), you cannot claim the deduction.
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All information sourced exclusively from: IRS.gov - Form 1040 Instructions 2018 and IRS.gov - Schedule 1 Form 2018
