Form 1040 (SP) Schedule 2 (Anexo 2) – Additional Taxes: A Complete Guide for 2020
What the Form Is For
Form 1040 Schedule 2 (Anexo 2), officially titled "Additional Taxes" (Impuestos Adicionales), is a supplemental form that you attach to your main tax return—Form 1040, 1040-SR, or 1040-NR—when you owe taxes that cannot be entered directly on the main form. Think of Schedule 2 as the place where the IRS collects various "extra" taxes that don't fit neatly into the standard tax calculation on your Form 1040.
The form is divided into two main parts. Part I deals with the Alternative Minimum Tax and any repayment of advance premium tax credits for health insurance. Part II covers a broader range of other taxes, including self-employment tax, household employment taxes, additional taxes on retirement accounts, and various other special assessments. The total from Schedule 2 gets added to your overall tax liability, increasing the amount you owe or reducing any refund you might receive.
For Spanish-speaking taxpayers, the IRS provides Form 1040 (SP) Schedule 2 (Anexo 2), which is the official Spanish-language version with identical content and requirements. Both the English and Spanish versions are legally equivalent documents that serve the same purpose in your tax filing.
When You’d Use It
Situations That Require Schedule 2
You need to complete Schedule 2 if any of the following situations apply to your 2020 tax year. First, if you're self-employed and earned net earnings of $400 or more, you'll owe self-employment tax to cover Social Security and Medicare contributions. Second, if you have high income with certain deductions and credits, you may trigger the Alternative Minimum Tax, which ensures that taxpayers with substantial economic income pay at least a minimum amount of tax. Third, if you received advance payments of the premium tax credit for health insurance purchased through the Marketplace and those payments exceeded what you're actually eligible for, you must repay the excess.
Additional situations requiring Schedule 2 include receiving early distributions from retirement accounts like IRAs, having household employees whose wages exceed specific thresholds, or owing uncollected Social Security and Medicare taxes on tips or wages. You'll also need this form if you're repaying the first-time homebuyer credit from 2008 or if you owe various other specialized taxes such as additional Medicare tax on high earners or the net investment income tax.
Late Filing
For late filing, Schedule 2 follows the same rules as your main return. The original deadline for 2020 tax returns was postponed to May 17, 2021, but if you missed this deadline and need to file Schedule 2, you should file it as soon as possible along with your Form 1040. Late filing can result in penalties and interest charges on any unpaid taxes. If you're filing late and Schedule 2 shows additional taxes owed, interest will accrue from the original due date, not from when you actually file.
Amended Returns
For amended returns, if you discover that you should have filed Schedule 2 with your original return or need to correct information you already reported, use Form 1040-X (Amended U.S. Individual Income Tax Return). You must attach a corrected or new Schedule 2 to Form 1040-X. The IRS now accepts electronically filed amended returns for certain tax years, though 2020 returns may need to be amended on paper depending on current processing capabilities. You generally have three years from the date you filed your original return or two years from the date you paid the tax (whichever is later) to file an amended return claiming a refund.
Key Rules or Details for 2020
Alternative Minimum Tax (AMT)
Several important thresholds and limits govern Schedule 2 for the 2020 tax year. The Alternative Minimum Tax exemption amount was $72,900 for single filers, $113,400 for married filing jointly, and $56,700 for married filing separately. These exemptions begin phasing out at $518,400 of income ($1,036,800 for joint filers).
Self-Employment Tax Rules
For self-employment tax, you must file Schedule SE if you have net earnings of $400 or more from self-employment. The Social Security tax applies to earnings up to $137,700, while Medicare tax applies to all earnings with no cap. Additionally, high earners may owe an Additional Medicare Tax of 0.9% on wages and self-employment income above $200,000 ($250,000 for married filing jointly).
Household Employment Taxes
Household employment taxes apply when you pay a household employee cash wages of $2,200 or more during 2020, or if you pay total cash wages of $1,000 or more in any calendar quarter. Don't count wages paid to employees under age 18 who are students. If these thresholds are met, you must file Schedule H and report the taxes on Schedule 2.
Retirement Account Taxes
For retirement accounts, early distributions taken before age 59½ generally trigger a 10% additional tax unless an exception applies. However, the CARES Act waived required minimum distributions for 2020. The premium tax credit repayment has its own limits based on household income, though the American Rescue Plan Act of 2021 later suspended excess repayment requirements for 2020.
Required Supporting Forms
A crucial rule to remember: you must attach all supporting forms to your return. Schedule 2 itself is just a summary—you need to attach Form 6251 for AMT, Form 8962 for premium tax credit reconciliation, Schedule SE for self-employment tax, Schedule H for household employment, Form 5329 for retirement account penalties, and other relevant forms depending on your situation.
Step-by-Step (High Level)
Step 1: Review Schedule 2 Lines
Begin by reviewing each line on Schedule 2 to determine which ones apply to your situation. Not everyone will have entries on every line—you only complete the sections relevant to your circumstances.
Step 2: Complete Part I — AMT & Premium Tax Credit
Line 1: Alternative Minimum Tax
Determine if you owe AMT using the worksheet in the Form 1040 instructions. If needed, complete Form 6251.
Line 2: Excess Advance Premium Tax Credit
If you or family members received Marketplace health insurance with advance credits, complete Form 8962 to reconcile.
Line 3: Total Part I
Add Lines 1 and 2 and transfer to Form 1040, line 17.
Step 3: Complete Part II — Other Taxes
Line 4: Self-Employment Tax
Complete Schedule SE, then transfer the tax amount.
Line 5a and 5b: Unreported SS/Medicare Taxes
Use Form 4137 (tips) or Form 8919 (uncollected taxes).
Line 6: Additional Tax on Retirement Accounts
Generally requires Form 5329.
Line 7a: Household Employment Taxes
Complete Schedule H.
Line 7b: First-Time Homebuyer Credit Repayment
Use Form 5405 if applicable.
Line 8: Other Taxes
Includes Additional Medicare Tax (Form 8959) and Net Investment Income Tax (Form 8960).
Line 9: Section 965 Installment Payments
Applies in limited international tax situations.
Line 10: Total Part II
Transfers to Form 1040/1040-SR line 23 or Form 1040-NR line 23b.
Common Mistakes and How to Avoid Them
Missing Required Attachments
One of the most frequent errors taxpayers make is forgetting to attach the required supporting forms. Schedule 2 is just a summary sheet—the IRS needs the detailed calculations behind each number.
Confusing Schedule 2 With Schedule 3
Excess Social Security withholding belongs on Schedule 3—not Schedule 2.
Incorrect AMT Calculations
Many taxpayers skip the AMT worksheet or incorrectly assume they’re exempt.
Overlooking Self-Employment or Household Employee Taxes
If you had $400 or more in net self-employment earnings or paid a qualifying household employee, you must report these taxes.
Miscalculating Retirement Account Penalties
Review Form 5329 instructions carefully; exceptions may apply.
Failing to Reconcile Premium Tax Credits
You must file Form 8962 even if repayment is suspended for 2020.
What Happens After You File
IRS Processing
Once you submit your return with Schedule 2, the IRS processes it along with all your other tax forms. If required forms are missing, you'll receive a notice.
Paying or Owing Additional Tax
If Schedule 2 increases your tax liability, you must pay the difference to avoid penalties and interest.
Refund Impact
Additional taxes reduce your refund or may convert it to a balance due.
Interest and Penalties
Interest accrues from the original due date (May 17, 2021). Underpayment penalties may apply.
Audit Risk
Returns claiming AMT, self-employment income, or premium tax credits may receive additional scrutiny.
FAQs
#### If I have self-employment income but also work a regular job, do I still need to pay self-employment tax?
Yes, self-employment tax is separate from income tax withholding at your regular job. Even if your employer withholds Social Security and Medicare taxes from your wages, you must also pay self-employment tax on net earnings of $400 or more from your side business or freelance work. Complete Schedule SE to calculate this tax, but you may be able to reduce the Social Security portion if your combined wages and self-employment income exceed the Social Security wage base of $137,700 for 2020.
#### How do I know if I need to worry about Alternative Minimum Tax?
Start by using the AMT worksheet in the Form 1040 instructions. You're more likely to owe AMT if you have high income combined with large itemized deductions, exercised incentive stock options, or claimed certain tax credits. The exemption amounts for 2020 are relatively high, but the only way to know for certain is to complete the worksheet or Form 6251.
#### What happens if I received advance premium tax credit payments but my income changed during the year?
You must reconcile your advance payments with your actual premium tax credit using Form 8962. If you received too much, you may need to repay some. The ARPA suspended repayment for 2020, but the form is still required.
#### Can I avoid the 10% penalty on an early retirement distribution if I used the money for an emergency?
Not for a general emergency—but exceptions exist, including disability, qualifying medical expenses, qualified higher education expenses, first-time homebuyer expenses, SEPP payments, and certain coronavirus-related distributions.
#### Do I need to file Schedule 2 if my employer withheld too much Social Security tax because I had two jobs?
No. Excess Social Security tax is a credit reported on Schedule 3. Only miscalculated withholding by a single employer should be corrected by the employer.
#### What are household employment taxes and when do I owe them?
You owe these taxes if you pay a household employee $2,200+ in 2020 or $1,000+ in any quarter. Use Schedule H to calculate and report them on Schedule 2.
#### If I made a mistake on my Schedule 2, how do I correct it?
File Form 1040-X with a corrected Schedule 2 and any supporting forms. You generally have three years from filing or two years from paying the tax to amend.
Source: IRS Form 1040 Schedule 2 and Instructions (2020)
