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 Form 1040 tax return that helps you report two important categories of financial information that don't fit on the main form itself. Think of it as an overflow page for your tax return.
The form has two distinct parts. Part I captures ""Additional Income""—money you earned or received that isn't from regular wages, such as unemployment benefits, business income, rental income, or that lottery scratch-off you won at the gas station. Part II deals with ""Adjustments to Income""—special deductions you can claim before calculating your adjusted gross income, like student loan interest you paid, health savings account contributions, or moving expenses if you're in the military.
You'll enter the total from Part I (line 9) onto your main Form 1040 at line 8, and the total from Part II (line 22) onto Form 1040 line 10a. These numbers flow directly into your tax calculations, so getting Schedule 1 right matters for determining your final tax bill or refund.
When You'd Use Form 1040 Schedule 1
Filing on Time
For tax year 2020, Schedule 1 would have been attached to your Form 1040 when you filed by the deadline—originally April 15, 2021, which was later postponed to May 17, 2021 due to COVID-19 pandemic relief measures.
You need Schedule 1 if you have any income beyond regular W-2 wages, Social Security, or simple investment earnings. Common situations include running a small business or side gig, receiving unemployment compensation, earning rental income, or getting alimony under a pre-2019 divorce agreement. You also need it if you're claiming adjustments like educator expenses, self-employment health insurance deductions, IRA contributions, or student loan interest.
Filing Late or Amended Returns
If you discover you needed Schedule 1 but didn't file it originally, or if you made errors on your Schedule 1, you'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return). For 2020 returns, the IRS began accepting electronically filed amended returns, though you can still mail a paper version. You generally have three years from the date you filed your original return, or two years from when you paid the tax (whichever is later), to file an amended return claiming a refund. Processing an amended return typically takes 8 to 16 weeks.
Key Rules for 2020
Several important rules govern Schedule 1 for 2020:
Part I (Additional Income)
Part I (Additional Income) requires you to report all taxable income sources beyond your basic wages. This includes self-employment earnings, unemployment benefits, gambling winnings, jury duty pay, and state tax refunds (if you itemized deductions in the prior year). For 2020 specifically, the American Rescue Plan Act created a special exclusion allowing taxpayers with modified adjusted gross income under $150,000 to exclude up to $10,200 of unemployment compensation from their income—$10,200 per spouse if married filing jointly.
Part II (Adjustments to Income)
Part II (Adjustments to Income) contains above-the-line deductions, meaning you can claim them even if you take the standard deduction rather than itemizing. Educator expenses are capped at $250 per eligible educator ($500 if both spouses qualify). Student loan interest deduction maxes out at $2,500 and phases out for higher earners. IRA deduction limits depend on whether you or your spouse have workplace retirement plans. Moving expenses for 2020 are only deductible if you're an active-duty military member moving under orders—regular taxpayers lost this deduction after 2017.
Alimony Rules
Important timing note: Alimony rules changed dramatically after December 31, 2018. If your divorce or separation agreement was executed before 2019, you report alimony received as income and can deduct alimony paid. Agreements from 2019 forward operate differently—the recipient doesn't report it as income and the payer can't deduct it.
Step-by-Step (High Level)
1. Gather Your Documents
Collect all relevant tax forms including 1099-G (unemployment), 1099-MISC (miscellaneous income), Schedule C (business income), Schedule E (rental income), receipts for educator expenses, Form 1098-E (student loan interest), and records of IRA contributions.
2. Complete Part I (Lines 1–9)
Work through each line that applies to your situation. If you received a state tax refund, use the worksheet in the instructions to determine if any portion is taxable. Enter unemployment compensation but complete the special worksheet if your income qualifies for the exclusion. List business income from Schedule C, rental income from Schedule E, and any other income sources with their amounts. Add lines 1 through 8 and enter the total on line 9.
3. Complete Part II (Lines 10–22)
Claim any adjustments you qualify for. Calculate educator expenses (remember the $250/$500 limits), enter the deductible portion of self-employment tax from Schedule SE, use the IRA deduction worksheet for retirement contributions, and apply the student loan interest worksheet if applicable. For adjustments not specifically listed, write in the type and amount on line 22 using the codes provided in the instructions. Add lines 10 through 21 plus any write-in adjustments for your line 22 total.
4. Transfer to Form 1040
Enter the line 9 total on Form 1040 line 8 and the line 22 total on Form 1040 line 10a.
5. Attach to Your Return
Schedule 1 must be physically attached to your paper Form 1040 or included in your electronic filing package.
Common Mistakes and How to Avoid Them
Forgetting the Unemployment Exclusion
Many 2020 filers missed the special $10,200 unemployment exclusion because it was enacted after tax season began. If you qualify, use the worksheet—the exclusion can significantly reduce your tax bill.
Claiming Ineligible Moving Expenses
Unless you're active-duty military moving under orders, you can't deduct moving expenses for 2020. Don't confuse the old rules (pre-2018) with current law.
Exceeding Educator Expense Limits
Enthusiastic teachers sometimes claim more than $250 without realizing the cap. Even if you spent $1,000 on classroom supplies, you can only deduct $250 (or $500 combined if your spouse is also an eligible educator).
Wrong Alimony Treatment
Know your divorce agreement date. Pre-2019 agreements mean the payer deducts and recipient reports as income; 2019-and-later agreements work oppositely. Don't forget to enter the date on line 2b or 18c.
Incorrect State Tax Refund Calculations
Not all state refunds are taxable. Use the worksheet carefully—if you took the standard deduction the year you paid the state taxes, your refund isn't taxable.
Math Errors
Simple addition mistakes on lines 9 and 22 can throw off your entire return. Double-check your calculations or use tax software that does the math automatically.
Missing Documentation
Attach required forms like Schedule C, Schedule E, Form 2106, Form 8889, or Form 8917 when the Schedule 1 line instructions tell you to. Missing schedules delay processing.
What Happens After You File
Once you file your Form 1040 with Schedule 1 attached, the IRS begins processing your return. E-filed returns typically process within 21 days, while paper returns take six weeks or longer.
The IRS computers will verify your math, check that income matches employer and financial institution reports, and confirm that your claimed deductions fit within allowed limits. If everything checks out, you'll receive your refund via direct deposit or check—whichever method you selected. You can track your refund status using the ""Where's My Refund?"" tool on IRS.gov, which updates within 24 hours after the IRS receives your e-filed return.
If the IRS finds errors or needs clarification, you'll receive a notice by mail. Common issues include math corrections, missing forms, or income verification questions. Respond to any notices promptly with the requested information.
For 2020 specifically, if you claimed the Earned Income Tax Credit or Additional Child Tax Credit, by law your refund couldn't be issued before mid-February 2021, giving the IRS time to verify claims and combat fraud. Also, 2020 returns included the Recovery Rebate Credit for taxpayers who didn't receive the full economic impact payments—the IRS carefully reviewed these calculations.
Keep copies of your return and all supporting documents for at least three years, as that's generally how long the IRS has to audit your return (though this extends to six years in certain situations).
FAQs
Can I take the student loan interest deduction if my parents paid my student loans?
No. You can only deduct interest on student loans where you're legally obligated to pay. If your parents paid interest on loans in their name, they might qualify for the deduction instead—but if the loans are in your name and your parents made gift payments to you or the lender, you could claim it.
I'm an educator who spent $400 on COVID-19 protective equipment for my classroom. Can I deduct it all?
The 2020 tax law expanded educator expenses to include personal protective equipment, disinfectant, and other COVID-prevention supplies, but you're still limited to the $250 maximum educator expense deduction. However, if your spouse is also an eligible educator who purchased qualifying supplies, you can collectively claim up to $500 (but neither spouse can exceed $250 individually).
Do I need to report unemployment benefits if I didn't receive Form 1099-G?
Yes, unemployment compensation is taxable income whether or not you receive the form. Contact your state unemployment office to get your 1099-G or check online—many states make them available through web portals. Report the correct amount on Schedule 1 line 7 and remember to check if you qualify for the special 2020 exclusion.
I received alimony under a 2015 divorce decree, but we modified the agreement in 2020 to change the payment schedule. Do I still report it as income?
Yes, as long as your 2020 modification didn't expressly state that the alimony payments are not includible in your income and not deductible by your ex-spouse. Modifications to pre-2019 agreements generally maintain the old tax treatment unless specifically changed to adopt the new rules.
Can I claim the IRA deduction even if my employer offers a 401(k) I didn't participate in?
Being ""covered"" by a workplace retirement plan means your employer offers one—participation doesn't matter. If you're covered (check box 13 on your W-2), your IRA deduction may be limited or phased out depending on your income, but you can still make nondeductible IRA contributions up to the annual limit.
I won $1,500 on a slot machine but lost $2,000 total gambling during the year. What do I report?
Report the full $1,500 in winnings on Schedule 1 line 8. You can deduct gambling losses, but only up to the amount of your winnings, and only if you itemize deductions on Schedule A—losses go there, not on Schedule 1. You cannot net gambling losses against winnings on Schedule 1.
What if I realize I made a mistake on Schedule 1 after I already filed?
File Form 1040-X to amend your return. For 2020 returns, you can file electronically through tax software or mail a paper form. Include an explanation of the changes and any additional documentation. If the correction results in additional tax owed, pay it as soon as possible to minimize interest and penalties.
Source: All information derived from official IRS publications including 2020 Form 1040 Schedule 1, 2020 Form 1040 Instructions, and About Form 1040-X.
