Form 1040 Schedule 1: Additional Income and Adjustments to Income (2021)
What Form 1040 Schedule 1 Is For
Schedule 1 is a companion form to your main tax return (Form 1040 or 1040-SR) that serves two important purposes. Think of it as an overflow sheet where you report income that doesn't fit on the main form and claim deductions that reduce your taxable income before you calculate your tax bill.
The schedule is divided into two parts. Part I captures ""additional income""—money you earned or received that isn't already reported on the main lines of Form 1040, such as unemployment benefits, business income, rental property income, or even that lottery scratch-off you won. Part II lists ""adjustments to income""—special deductions you can claim whether or not you itemize, including things like contributions to retirement accounts, student loan interest, and health savings account contributions. These adjustments are particularly valuable because they reduce your adjusted gross income (AGI), which can make you eligible for other tax benefits.
The amounts from Schedule 1 flow directly onto your Form 1040: the total additional income goes to line 8, and the total adjustments go to line 10. You only need to file Schedule 1 if you have income or adjustments to report on it—if your tax situation is simple (just wages, standard deduction, and basic credits), you won't need this schedule at all.
When You’d Use Form 1040 Schedule 1
You'll file Schedule 1 along with your main Form 1040 when you prepare your 2021 tax return. For most taxpayers, this meant filing by April 18, 2022 (or April 19 for residents of Maine and Massachusetts due to local holidays). If you e-file, the tax software automatically includes Schedule 1 if needed; if you mail a paper return, you attach Schedule 1 right behind your Form 1040.
If you discover later that you forgot to report income or claim adjustments that belong on Schedule 1, you'll need to file an amended return using Form 1040-X. The IRS gives you three years from the date you filed your original return (or two years from when you paid the tax, whichever is later) to amend and claim a refund. When amending, you must submit a complete Schedule 1 showing both the original figures and the corrected amounts, along with all other necessary schedules, as if you were filing from scratch.
If you couldn't meet the original deadline, you could have requested an automatic six-month extension by filing Form 4868, giving you until October 2022 to file. However, an extension to file is not an extension to pay—any taxes owed were still due by the original April deadline, and interest accrues on late payments. Members of the military serving in combat zones or living abroad may qualify for additional time to file without requesting an extension.
Key Rules or Details for Tax Year 2021
Schedule 1 operates under several important rules that govern what you can report and claim. For Part I (additional income), you must report the full amount of certain types of income that the IRS already knows about through information returns. For example, if you received unemployment compensation, your state sent you Form 1099-G, and the IRS received a copy too. Failing to report this income will trigger an automatic notice.
Not all income is taxable, though. If you received certain types of money—gifts, inheritances, life insurance proceeds, most child support, or qualified disaster relief payments—you don't report them on Schedule 1 or anywhere else on your return. The instructions specifically list what counts as taxable versus nontaxable income to help you sort this out.
For Part II (adjustments to income), eligibility rules vary by deduction. Some adjustments, like the educator expense deduction, require you to meet specific criteria (working at least 900 hours during the school year as a K-12 educator). Others, like the student loan interest deduction, phase out as your income rises—if you earn too much, you can't claim them at all. For 2021, the student loan interest deduction began phasing out at $70,000 of modified adjusted gross income ($140,000 for married couples filing jointly) and disappeared completely at $85,000 ($170,000 for couples).
Timing matters significantly for certain items. Alimony, for instance, follows different rules depending on when your divorce or separation agreement was finalized. Alimony received under agreements dated December 31, 2018, or earlier is taxable income (reported on line 2a); alimony under agreements after that date generally isn't taxable at all. Similarly, alimony paid is only deductible (line 19a) if it's under a pre-2019 agreement that wasn't modified to eliminate the deduction.
Step-by-Step (High Level)
Completing Schedule 1 follows a logical flow.
Part I: Reporting Additional Income
Start with Part I by gathering all your income documents—Forms 1099-G for unemployment, 1099-MISC for miscellaneous income, Schedule C if you have business income, Schedule E for rental properties, and so forth. Work through lines 1 through 8z, entering the appropriate amounts. Some lines are straightforward numbers you copy from other forms; others require calculations using worksheets in the instructions. For instance, if you received a state tax refund (line 1), you'll need to use the State and Local Income Tax Refund Worksheet to determine how much, if any, is taxable—it depends on whether you itemized deductions in the prior year and whether you got a tax benefit from that deduction.
Line 8: Other Income Details
Line 8 contains multiple subsections (8a through 8z) for various types of ""other income."" This is where you report items like gambling winnings (even from casual lottery tickets or office pools), jury duty pay you kept, prizes and awards, Alaska Permanent Fund dividends, and more obscure items like Section 951(a) inclusions from controlled foreign corporations. If your income doesn't fit any of the specific categories, you use line 8z to list the type and amount. Add up all the line 8 items, enter the subtotal on line 9, then combine lines 1 through 7 and 9 to get your total additional income on line 10. Transfer this number to Form 1040, line 8.
Part II: Claiming Adjustments to Income
For Part II, collect documentation for any adjustments you're entitled to claim. If you made IRA contributions, you'll need your records and will use a worksheet to calculate your deduction if you (or your spouse) were covered by a retirement plan at work—income limits may reduce how much you can deduct. If you have a Health Savings Account, you'll complete Form 8889 first, then transfer the deductible contribution amount to Schedule 1, line 13. For self-employed individuals, several lines will be relevant: line 15 for half of your self-employment tax (from Schedule SE), line 16 for retirement plan contributions, and line 17 for health insurance premiums you paid.
Totaling Adjustments and Transferring to Form 1040
Work through lines 11 through 24z, entering amounts for each adjustment that applies to you. Some items have caps—educator expenses max out at $250 per person ($500 total if you're married filing jointly and both spouses are educators), and student loan interest tops out at $2,500. Line 24 has multiple subsections for less common adjustments, including jury duty pay you repaid to your employer (line 24a), attorney fees for certain discrimination claims (line 24h), and several others. Total everything on line 25, then add lines 11 through 23 and 25 to arrive at line 26—your total adjustments to income. This amount goes on Form 1040, line 10, reducing your income before you calculate your AGI.
Common Mistakes and How to Avoid Them
Forgetting to Attach Schedule 1
One of the most frequent errors is failing to attach Schedule 1 when it's required. If you report income or adjustments on the schedule but forget to include it with your return, the IRS will process your return without those amounts, potentially increasing your tax bill or reducing your refund. Always double-check that Schedule 1 is attached if you filled one out.
Double-Reporting or Omitting Income
Another common mistake involves double-reporting or omitting income. Some taxpayers report unemployment compensation on both the main Form 1040 and Schedule 1, artificially inflating their income. Others forget to report state tax refunds because they don't realize they're taxable. Remember: if you itemized deductions on your prior-year return and deducted state income taxes, your refund is likely taxable—use the worksheet to be sure. Conversely, if you took the standard deduction or deducted sales tax instead of income tax, your state refund is tax-free and shouldn't be reported.
Misapplying Deduction Limits
Mixing up deduction limits trips up many filers. The IRA deduction, for example, has different rules depending on whether you're covered by a workplace retirement plan, your filing status, and your income level. Using the wrong worksheet or skipping it entirely leads to claiming too much or too little. Similarly, the student loan interest deduction gets miscalculated when taxpayers forget to reduce the amount by scholarships or employer reimbursements, or when they exceed the $2,500 cap without realizing it. Always use the provided worksheets—they're there to prevent these exact mistakes.
Math Errors on Line 8 and Totals
Math errors plague Part I, line 8, where you must add up numerous subsections. Missing a line or transposing numbers creates problems. Take your time and double-check your addition, or better yet, use tax software that calculates automatically. Also watch for items that are entered as negative numbers—line 8a (net operating loss deduction) and line 8d (foreign earned income exclusion) typically appear in parentheses because they reduce income.
Claiming Ineligible Adjustments
For adjustments, a frequent error is claiming deductions you're not eligible for. Educator expenses, for instance, are only available to K-12 teachers, instructors, counselors, principals, or aides who worked at least 900 hours during the school year. Sunday school teachers, tutors, and college instructors don't qualify. The moving expense deduction (line 14) is limited to active-duty Armed Forces members moving due to military orders—everyone else lost this deduction after 2017. Double-check eligibility requirements before claiming any adjustment.
What Happens After You File
Once you submit your return with Schedule 1 attached, the IRS processes it through several review stages. If you e-filed, you'll typically receive an acknowledgment within 24 hours confirming the IRS received your return. The agency then checks for obvious errors, missing forms, and math mistakes. Schedule 1 amounts are cross-referenced with information returns the IRS has on file—for example, your reported unemployment compensation is matched against the Form 1099-G your state submitted.
Most returns process within 21 days if e-filed, though paper returns take much longer (six weeks or more). Returns requiring extra review—perhaps because of large refund claims, missing information, or discrepancies between what you reported and what appears on information returns—take additional time. If the IRS finds an issue with your Schedule 1, such as income you reported but they have no record of (or vice versa), they may send you a notice requesting clarification or informing you of a change they're making.
If your Schedule 1 contained errors that increased your tax, the IRS will send you a bill for the additional amount plus interest and possibly penalties. If errors decreased your tax, they'll adjust your refund accordingly and send an explanation. You can track your refund status using the ""Where's My Refund?"" tool on IRS.gov, which updates once daily (usually overnight).
For amended returns including Schedule 1 changes, processing takes considerably longer—expect 8 to 12 weeks, sometimes up to 16 weeks. You can check the status using the ""Where's My Amended Return?"" tool on the IRS website. The IRS doesn't send automatic confirmations for amended returns, so using the online tool is your best way to track progress.
If the IRS audits your return, Schedule 1 items are often scrutinized because they involve income types and adjustments that require documentation. Keep records supporting everything you reported—1099 forms, receipts for educator expenses, HSA contribution statements, student loan interest statements, and so forth—for at least three years after filing (longer if you have certain types of issues).
FAQs
Do I need to file Schedule 1 if I only have W-2 income from my job?
Probably not. Schedule 1 is only required if you have additional income beyond what's reported directly on Form 1040 (like wages, interest, dividends, and Social Security benefits) or if you're claiming adjustments to income. If your only income is from wages shown on your W-2 and you're not claiming any of the adjustments listed in Part II, you can skip Schedule 1 entirely. However, if you also collected unemployment, did gig work through Schedule C, or want to deduct IRA contributions or student loan interest, you'll need to file Schedule 1.
What's the difference between adjustments to income on Schedule 1 and itemized deductions on Schedule A?
Adjustments to income (Schedule 1, Part II) are often called ""above-the-line"" deductions because they reduce your income before you calculate adjusted gross income (AGI). You can claim these whether you itemize or take the standard deduction, and they're valuable because a lower AGI can help you qualify for other tax breaks. Itemized deductions (Schedule A) are ""below-the-line""—you only get them if your total itemized deductions exceed the standard deduction ($12,550 for single filers in 2021, $25,100 for married couples filing jointly). Common itemized deductions include mortgage interest, charitable contributions, and medical expenses above a certain threshold.
I received a state tax refund but took the standard deduction last year. Do I still need to report the refund on Schedule 1?
No. State tax refunds are only taxable if you itemized deductions on your prior-year federal return and claimed a deduction for state income taxes paid, and only to the extent you received a tax benefit from that deduction. If you took the standard deduction in the prior year, or if you itemized but chose to deduct state sales taxes instead of income taxes, your state tax refund is entirely tax-free and doesn't get reported anywhere on your return. The instructions include a worksheet to help you determine the taxable portion if you did itemize.
Can I deduct alimony I paid on Schedule 1 if I got divorced recently?
It depends on when your divorce or separation agreement was finalized. Alimony paid under divorce or separation agreements executed after December 31, 2018, is no longer deductible, and the recipient doesn't report it as income. Only alimony paid under agreements dated on or before December 31, 2018, remains deductible on Schedule 1, line 19a (unless the agreement was modified after 2018 to specifically state that the new tax rules apply). You must include the recipient's Social Security number and the date of the original agreement on Schedule 1. This change also applies to alimony received—report it on line 2a only if it's under a pre-2019 agreement.
I'm self-employed. Which parts of Schedule 1 apply to me?
Several adjustments are specifically designed for self-employed individuals. First, you'll report your business income (or loss) from Schedule C on Schedule 1, line 3 in Part I. Then in Part II, you can claim multiple adjustments: half of your self-employment tax (line 15, calculated from Schedule SE), contributions to SEP, SIMPLE, or other self-employed retirement plans (line 16), and health insurance premiums you paid for yourself, your spouse, and dependents (line 17). If you also contributed to a Health Savings Account, that goes on line 13. These adjustments can significantly reduce your taxable income, so make sure you're claiming everything you're entitled to.
What happens if I discover I made a mistake on Schedule 1 after I already filed?
If you realize you forgot to report income or missed claiming an adjustment on Schedule 1, you'll need to file an amended return using Form 1040-X. Generally, you have three years from when you filed your original return to file an amendment and claim a refund. Form 1040-X has three columns—one for the original amounts, one for the net change, and one for the correct amounts. You'll complete a corrected Schedule 1 and attach it to Form 1040-X, along with any other forms or schedules that changed. You can now file amended returns electronically through tax software, which is faster than mailing paper forms. Allow 8 to 12 weeks (sometimes up to 16 weeks) for the IRS to process your amended return.
If I'm claiming the educator expense deduction, what kinds of expenses qualify?
Qualifying expenses include ordinary and necessary unreimbursed expenses you paid for books, supplies, computer equipment (including related software and services), other classroom equipment, and supplementary materials you use in the classroom. Professional development courses related to the curriculum you teach or the students you teach also qualify. However, you must reduce your deductible expenses by any reimbursements you received, interest earned on a Coverdell education savings account, withdrawals from a Section 529 qualified tuition program, and any other tax-free distributions. The maximum deduction is $250 ($500 if you're married filing jointly and both spouses are eligible educators, but no more than $250 each). To qualify, you must have worked at least 900 hours during the school year as a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide.
Sources
Sources: All information in this summary comes from official IRS publications available at IRS.gov: 2021 Form 1040 Schedule 1 and 2021 Instructions for Form 1040.
