Form 1040(SP) ANEXO 1: Ingreso Adicional y Ajustes al Ingreso (2023)
What the Form Is For
Schedule 1 (Anexo 1 in Spanish) is an attachment to Form 1040, 1040-SR, or 1040-NR that serves a critical dual purpose. Part I captures additional income that doesn't fit on the main tax return—things like business income, unemployment compensation, rental income, gambling winnings, and various other sources. Part II reports adjustments to income (sometimes called "above-the-line deductions") that reduce your adjusted gross income before you claim the standard or itemized deduction. These adjustments include educator expenses, student loan interest, self-employed health insurance, IRA contributions, and moving expenses for military members.
Think of Schedule 1 as the "everything else" attachment. If you received money from sources beyond wages, interest, and dividends, or if you qualify for certain deductions that aren't claimed elsewhere, Schedule 1 is where you report them. The total from Part I (line 10) transfers to Form 1040 line 8 to increase your income, while the total from Part II (line 26) transfers to Form 1040 line 10 to decrease your income. Both figures ultimately affect your adjusted gross income (AGI), which determines your eligibility for many tax benefits.
You must file Schedule 1 if you have any reportable income or adjustments listed on the form, even if you only have one item to report. The Spanish version (Anexo 1) is functionally identical to the English Schedule 1 and is provided to help Spanish-speaking taxpayers complete their returns accurately.
When You'd Use Schedule 1 (Late/Amended Returns)
Most taxpayers file Schedule 1 with their original return by the April tax deadline (April 15, 2024 for 2023 returns, or April 17 for Maine and Massachusetts residents due to regional holidays). However, life happens, and you may need to file Schedule 1 later or amend it after the fact.
Late Filing
If you miss the April deadline and haven't filed an extension (Form 4868), you can still file Schedule 1 along with your Form 1040. While the IRS accepts late returns, you'll owe penalties and interest on any unpaid tax from the original due date forward. The failure-to-file penalty is typically 5% of unpaid taxes per month (up to 25%), so filing late is better than not filing at all. If you properly filed an extension before the deadline, you have until October 15, 2024 to submit your 2023 return without penalty, though any taxes owed are still due by the April deadline.
Amended Returns
If you discover errors or omissions on Schedule 1 after filing your original return, you'll need to file Form 1040-X (Amended U.S. Individual Income Tax Return). Common scenarios include forgetting to report unemployment income, discovering additional business expenses you can deduct, or correcting an error in your educator expense calculation. You can amend returns electronically for the current year and two prior tax years, making the process faster than in the past. Paper amendments are still required for older returns or certain complex situations.
An amended return must include a complete, corrected Schedule 1 showing all income and adjustments—even items that haven't changed. The IRS generally processes amended returns within 8 to 12 weeks, though complex cases may take up to 16 weeks. You can check the status of your amended return using the "Where's My Amended Return?" tool on IRS.gov after three weeks. You typically have three years from the original filing date or two years from when you paid the tax (whichever is later) to file an amended return claiming a refund.
Key Rules You Need to Know
Income Reporting Rules
Part I requires you to report all additional income sources, even if they're small amounts. Unemployment compensation goes on line 7, even though it's reported on Form 1099-G. Business income and losses from Schedule C appear on line 3. If you won $50 at a casino or received a $100 gift card as an employee award, these belong on line 8 (other income). The IRS receives copies of information returns like 1099 forms, so omitting income can trigger notices or audits. Some income requires additional forms—for example, rental property income needs Schedule E, which then flows to Schedule 1 line 5.
Adjustment Limitations
Many deductions in Part II have income-based phase-outs or dollar caps. The educator expense deduction maxes out at $300 per eligible teacher ($600 if married filing jointly and both are eligible educators). Student loan interest deduction is capped at $2,500 and phases out completely when your modified AGI exceeds $85,000 ($175,000 if married filing jointly). IRA deduction limits depend on whether you or your spouse are covered by a retirement plan at work—if so, deduction amounts phase out at certain income levels. Several adjustments require specific documentation or supporting forms, like Form 8889 for HSA deductions or Form 2106 for unreimbursed employee business expenses (limited to reservists, performing artists, and fee-basis government officials).
Alimony Special Rules
One of the most commonly misunderstood aspects involves alimony. For divorce or separation agreements executed before January 1, 2019, alimony received is taxable income (line 2a) and alimony paid is deductible (line 19a). However, for agreements made on or after that date, the tax treatment changed completely—recipients don't report it as income and payers cannot deduct it. If a pre-2019 agreement was modified after 2018 to specifically state that alimony payments are no longer deductible/includible, the new rules apply. You must provide the recipient's Social Security number and the divorce/separation agreement date when claiming the alimony deduction.
Military-Only Benefits
Some adjustments apply exclusively to military members. Line 14 (moving expenses) is available only to active-duty members of the Armed Forces who move due to a permanent change of station. Unlike previous years when all taxpayers could deduct moving expenses, current law restricts this benefit to military personnel.
Step-by-Step Guide (High Level)
Step 1: Gather Your Documents
Collect all Forms W-2, 1099 (all varieties), 1098, K-1 statements, and records of other income sources like gambling winnings, jury duty pay, or unemployment compensation. Also gather documentation for adjustments you plan to claim: receipts for educator expenses, student loan interest statements (Form 1098-E), HSA contribution records, and proof of IRA contributions.
Step 2: Complete Related Schedules First
Before filling out Schedule 1, complete any other schedules that feed into it. If you have business income, finish Schedule C. Rental property? Complete Schedule E. Farm income requires Schedule F. Self-employment tax needs Schedule SE. These "upstream" forms provide the numbers you'll enter on Schedule 1.
Step 3: Fill Out Part I (Additional Income)
Enter each income type on its designated line. Taxable state tax refunds go on line 1 (only if you itemized deductions last year and received a tax benefit). Alimony received (pre-2019 agreements) goes on line 2a with the agreement date on line 2b. Lines 3 through 7 pull from other schedules. Lines 8a through 8z cover miscellaneous income—jury duty pay, prizes, gambling winnings, cancellation of debt, and various other sources. Each item on line 8 requires proper documentation. Total all Part I lines and enter the sum on line 10, which transfers to Form 1040 line 8.
Step 4: Fill Out Part II (Adjustments to Income)
Work through lines 11 to 26 systematically. Educator expenses (line 11) require you to be a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked at least 900 hours. The deduction covers unreimbursed expenses for books, supplies, equipment, and professional development, capped at $300 ($600 married filing jointly if both qualify). Other common adjustments include HSA contributions (line 13), self-employment tax (line 15), self-employed health insurance (line 17), student loan interest (line 21), and IRA contributions (line 20). Each adjustment may require a worksheet found in the Form 1040 instructions to calculate the allowable amount, especially if income limitations apply. Total all Part II lines and enter the sum on line 26, which transfers to Form 1040 line 10.
Step 5: Transfer Totals and Review
Carry line 10 to Form 1040 line 8 and line 26 to Form 1040 line 10. Double-check all entries against your source documents. Verify that names and Social Security numbers match official records. Ensure you've attached all required supporting forms and schedules. Sign, date, and file your return by the April deadline (or your extended deadline if you filed Form 4868).
Common Mistakes and How to Avoid Them
Mistake 1: Forgetting to Report All Income
Many taxpayers overlook income because they didn't receive a 1099 form or because the amount seems too small to matter. All income is taxable unless specifically excluded by law. Even if you earned $10 in jury duty pay or sold personal items online, these amounts generally must be reported.
How to avoid it: Keep a running log throughout the year of any money you receive from sources other than your regular paycheck, interest, or dividends. At tax time, review bank statements and payment apps for income you might have forgotten.
Mistake 2: Claiming Adjustments Without Proper Documentation
Claiming a $2,500 student loan interest deduction without Form 1098-E from your lender, or deducting educator expenses without receipts, leaves you vulnerable during an audit.
How to avoid it: Create a tax folder throughout the year where you store all relevant receipts, forms, and statements. For educator expenses, keep detailed records showing the date, item purchased, cost, and how it relates to your teaching duties.
Mistake 3: Applying Old Alimony Rules to New Agreements
Taxpayers frequently try to deduct alimony paid under post-2018 agreements or report as income alimony received under such agreements. The tax law changed dramatically for divorce agreements finalized after December 31, 2018.
How to avoid it: Check the date of your divorce decree or separation agreement. If it's 2019 or later, alimony is not deductible by the payer and not taxable to the recipient, so it doesn't belong on Schedule 1 at all. If it's a pre-2019 agreement that was later modified, check whether the modification specifically states the new rules apply.
Mistake 4: Math Errors and Transposition Errors
Simple arithmetic mistakes or copying numbers incorrectly from supporting schedules cause processing delays.
How to avoid it: Use tax software that performs calculations automatically, or double-check all math if preparing manually.
Mistake 5: Exceeding Income-Based Limits
Many taxpayers claim the full student loan interest deduction or IRA deduction without realizing income makes them ineligible or reduces the allowable amount.
How to avoid it: Use the worksheets in Form 1040 instructions to calculate the allowable deduction, especially if phase-out rules apply.
Mistake 6: Missing Supporting Forms
Filing Schedule 1 without proper attachments (e.g., Schedule C for business income or Schedule E for rental income) leads to delays or rejection.
How to avoid it: Create a checklist of all needed forms. E-filing software usually flags missing attachments.
What Happens After You File
Initial Processing (4–6 Weeks)
Once the IRS receives your return with Schedule 1, it enters the processing pipeline. E-filed returns process faster than paper returns—typically 3 weeks versus 6–8 weeks. During processing, the IRS checks math, verifies Social Security numbers, confirms income matches W-2s and 1099s, and ensures required signatures and forms are present.
Refunds or Balances Due
Refunds issued via direct deposit typically arrive within 21 days of e-filing. Paper checks take longer. If you owe taxes, payment is due by the April deadline regardless of when you file.
Notices and Correspondence
The IRS may send notices if issues appear—for example, mismatched income, missing forms, or math corrections. Always respond before the deadline in the notice.
Potential Audits
Certain items on Schedule 1 carry higher audit risk: repeated business losses, vague "Other income" entries, or adjustments near maximum allowed amounts. If audited, provide documentation promptly and consider seeking professional help.
Record Retention
Keep Schedule 1 and all supporting documents for at least 3 years; up to 7 years for losses or bad debts. Digital records are acceptable if stored securely.
Frequently Asked Questions
I forgot to report $500 of unemployment income on my Schedule 1. What should I do?
File Form 1040-X with a corrected Schedule 1. You'll likely owe additional tax and interest.
Can I claim both the student loan interest deduction and the educator expense deduction?
Yes. These deductions don’t interact and can be claimed together.
My divorce was finalized in 2017 but modified in 2020. Can I still deduct alimony?
Only if the modification does not state that post-2018 tax rules apply.
I work two teaching jobs. Can I claim $600 in educator expenses?
No. It's $300 maximum per eligible educator, not per job. Married filing jointly: $300 each if both qualify.
What's the difference between adjustments to income and itemized deductions?
Adjustments reduce AGI and apply before the standard or itemized deduction. Itemized deductions reduce taxable income after AGI.
I received a 1099-NEC for freelance work. Where does this go?
Report it on Schedule C, then transfer the net result to Schedule 1 line 3.
My employer reimbursed part of my classroom supplies. Can I still claim the full $300?
No. You must subtract reimbursements from your total educator expenses.
Sources
- 2023 Schedule 1 (Form 1040)
- 2023 Schedule 1 (SP) Form 1040
- 2023 Instructions for Form 1040
- IRS Topic No. 303
- IRS Amended Return FAQs
