What Schedule 1 Is For

Schedule 1 (Form 1040 or 1040-SR) is an attachment to your main tax return that serves two important purposes: reporting additional income and claiming adjustments to income (also called "above-the-line deductions"). Starting in 2019, the IRS redesigned Form 1040 to make it simpler, moving many income and deduction items to separate schedules. Schedule 1 became the home for income sources that don't fit on the main form—like business income, unemployment compensation, or gambling winnings—as well as deductions that reduce your adjusted gross income (AGI) before you claim the standard or itemized deduction.

Think of Schedule 1 as having two distinct parts. Part I (lines 1-9) captures "Additional Income"—money you earned or received that isn't from wages, Social Security, or retirement accounts reported elsewhere. Part II (lines 10-22) lists "Adjustments to Income"—special deductions like educator expenses, student loan interest, or contributions to retirement plans that lower your taxable income. The totals from Schedule 1 flow directly onto your Form 1040, affecting your AGI and ultimately your tax bill.

You'll need Schedule 1 if you had income beyond a regular paycheck—such as running a side business, receiving alimony under an older divorce decree, or winning money gambling—or if you qualify for specific deductions like health savings account contributions or the penalty you paid for early withdrawal from a savings account.

When You’d Use Schedule 1 (Including Late or Amended Returns)

You must attach Schedule 1 to your 2019 Form 1040 or 1040-SR if any of the situations in Part I or Part II apply to you. For most taxpayers, the original deadline was April 15, 2020. If you missed that deadline and need to file now, you can still submit your 2019 return—but be aware that late filing may trigger penalties and interest on any unpaid tax.

If you already filed your 2019 return but realized you forgot to report income on Schedule 1 (like unemployment benefits or business income) or missed claiming an adjustment (such as educator expenses or IRA contributions), you'll need to file an amended return using Form 1040-X. The IRS generally allows three years from the original filing deadline to amend a return and claim a refund. For 2019 returns, that means you typically have until April 15, 2023, to amend (though specific circumstances can extend this period).

Virtual currency transactions introduced a new requirement in 2019: if you engaged in any transaction involving virtual currency during the year—receiving, selling, sending, exchanging, or otherwise acquiring financial interest in cryptocurrency—you must check "Yes" at the top of Schedule 1, even if you had no taxable gain or loss. This applies to late and amended filings as well.

Key Rules or Details for 2019

Several important changes and rules applied specifically to tax year 2019:

Alimony Rules Changed

For divorce or separation agreements executed after December 31, 2018, alimony received is no longer taxable to the recipient, and alimony paid is no longer deductible by the payer. Only agreements entered into on or before December 31, 2018 (or later modifications that specifically state the old rules apply) qualify for reporting on Schedule 1. If you received or paid alimony under a qualifying agreement, you must include the recipient's Social Security number and the date of the original agreement.

Virtual Currency Disclosure

The top of Schedule 1 asks whether you had any virtual currency transactions in 2019. This was the first year this question appeared. Answer truthfully—checking "No" when you actually had crypto transactions can trigger IRS scrutiny.

Tuition and Fees Deduction Restored

Congress extended the tuition and fees deduction (up to $4,000) for 2019 after it had expired. If you paid qualified higher education expenses, you can claim this on line 21 using Form 8917, subject to income limits.

Moving Expense Restriction

For 2019, only active-duty members of the Armed Forces moving due to a military order can deduct moving expenses (line 13). This change, which started in 2018, eliminated the moving expense deduction for most taxpayers.

Standard Deduction Increased

While not directly on Schedule 1, the 2019 standard deduction increased to $12,200 (single), $24,400 (married filing jointly), and $18,350 (head of household). Adjustments to income on Schedule 1 reduce your AGI before you take the standard or itemized deduction, making them especially valuable.

Step-by-Step (High Level)

Step 1: Gather Your Documents

Collect all income statements (Forms 1099-G for unemployment, 1099-MISC for other income, Schedule C for business income, etc.) and receipts for adjustments (educator expense receipts, student loan interest statement Form 1098-E, IRA contribution records, HSA statements).

Step 2: Complete Part I – Additional Income (Lines 1-8)

Report each type of additional income on the appropriate line. This includes state tax refunds (if you itemized last year), alimony received under pre-2019 agreements, business profit or loss, rental income, unemployment compensation, and other income like prizes, gambling winnings, or jury duty pay. Don't forget to check the virtual currency box at the top if applicable. Add lines 1 through 8 and enter the total on line 9.

Step 3: Transfer Part I Total to Form 1040

Enter the amount from Schedule 1, line 9, on your Form 1040 or 1040-SR, line 7a. This adds your additional income to your total income.

Step 4: Complete Part II – Adjustments to Income (Lines 10-22)

Claim any adjustments you're eligible for: educator expenses (up to $250), HSA deductions, self-employment tax deduction, self-employed health insurance premiums, IRA contributions, student loan interest (up to $2,500), tuition and fees, and others. Many of these require separate forms or worksheets—follow the specific line instructions carefully. Add lines 10 through 22 and enter the total on line 22.

Step 5: Transfer Part II Total to Form 1040

Enter the amount from Schedule 1, line 22, on your Form 1040 or 1040-SR, line 8a. This reduces your total income, lowering your adjusted gross income (AGI).

Step 6: Attach Schedule 1 to Your Return

Place Schedule 1 behind Form 1040 along with any other required schedules and forms (like Schedule C, Form 8889, Form 8917, etc.). If filing electronically, your tax software handles the attachment automatically.

Common Mistakes and How to Avoid Them

Mistake #1: Forgetting to Report All Income

Many taxpayers accidentally omit unemployment compensation, gambling winnings, or side business income. Remember: the IRS receives copies of Forms 1099 reporting this income, so leaving it off triggers matching notices. Solution: Carefully review all 1099 forms and income sources before filing.

Mistake #2: Incorrect Virtual Currency Reporting

Some filers check "No" for virtual currency when they actually bought, sold, or exchanged cryptocurrency. Others check "Yes" but forget to report the actual gain or loss. Solution: If you had any crypto activity—even just buying Bitcoin—check "Yes" and report any taxable events on Form 8949 and Schedule D.

Mistake #3: Claiming Alimony Under Wrong Rules

Taxpayers paying or receiving alimony sometimes incorrectly apply 2019's new rules to older divorce agreements, or vice versa. Solution: Check your divorce or separation agreement date. Only agreements from December 31, 2018, or earlier qualify for the deduction/income treatment. You must also provide the recipient's SSN and agreement date.

Mistake #4: Missing Required Forms or Worksheets

Many Schedule 1 deductions require additional forms (Form 8889 for HSA, Form 8917 for tuition, Schedule SE for self-employment tax). Filing without these attachments can delay processing or trigger rejections. Solution: Use the IRS instructions or tax software to ensure you attach all required supporting forms.

Mistake #5: Math Errors and Incorrect Worksheet Results

Complex calculations for IRA deductions, student loan interest phase-outs, or self-employed health insurance often contain errors. Solution: Use the official IRS worksheets provided in the instructions (pages 86, 88, 90) or let tax software do the calculations.

Mistake #6: Claiming Ineligible Deductions

For example, claiming moving expenses when you're not active-duty military, or claiming educator expenses when you're not a K-12 teacher. Solution: Read the eligibility requirements carefully for each line before claiming a deduction.

What Happens After You File

Once you submit your 2019 tax return with Schedule 1 attached, the IRS processes it through automated systems that check for math errors, missing information, and income matching. If everything matches and no red flags appear, you'll receive your refund within 21 days (if filing electronically with direct deposit) or longer if filing by mail.

If the IRS Finds Issues

You may receive a notice asking for clarification or additional documentation. Common Schedule 1 issues include missing Forms W-2 or 1099, math errors in adjustment calculations, or mismatches between reported income and IRS records. Respond promptly with the requested information.

Math Error Authority

The IRS can correct obvious mathematical or clerical errors—like addition mistakes on line 9 or line 22—and adjust your refund or balance due without sending a formal audit notice. You'll receive an explanation of the correction.

Audits and Examinations

Certain Schedule 1 items trigger higher audit rates, including large business losses (Schedule C), substantial gambling income, or unusual "Other Income" entries. If selected for audit, you'll need to provide documentation supporting your reported amounts—bank statements, receipts, contracts, or other records.

Amended Returns

If you file Form 1040-X to amend your Schedule 1, expect processing to take longer—typically 8 to 12 weeks or more, especially during peak filing season. The IRS will review your changes and issue an adjusted refund or balance due notice.

FAQs

Q1: Do I need Schedule 1 if I only have W-2 wage income?

No. If your only income is from wages (reported on Form W-2) and you're not claiming any adjustments to income, you don't need Schedule 1. You can file just Form 1040 or 1040-SR.

Q2: Can I deduct alimony I paid in 2019 under a 2020 divorce agreement?

No. For divorces finalized after December 31, 2018, alimony is not deductible for the payer and not taxable for the recipient. Only agreements executed on or before December 31, 2018, qualify for the old tax treatment.

Q3: What counts as a virtual currency transaction?

According to the IRS, you must answer "Yes" if you received, sold, sent, exchanged, or otherwise acquired any financial interest in virtual currency during 2019. This includes buying cryptocurrency with cash, trading one crypto for another, using crypto to purchase goods or services, or receiving crypto as payment. Simply holding cryptocurrency without any transactions doesn't require a "Yes" answer.

Q4: What if I contributed to my IRA in 2020 but want to count it toward 2019?

You can make IRA contributions for 2019 up until the tax filing deadline (April 15, 2020). As long as you made the contribution by that date and designated it for 2019 with your IRA custodian, you can claim the deduction on your 2019 Schedule 1, line 19.

Q5: Can I claim educator expenses if I'm a college professor?

No. The educator expense deduction (line 10) is only for eligible K-12 teachers, instructors, counselors, principals, or aides who worked at least 900 hours during the school year. College and university educators don't qualify.

Q6: I received unemployment but didn't get a Form 1099-G. Do I still report it?

Yes. All unemployment compensation is taxable and must be reported on Schedule 1, line 7, whether or not you received Form 1099-G. Contact your state unemployment office to request the form or access your account online to find the amount.

Q7: What's the difference between adjustments to income and itemized deductions?

Adjustments to income (Schedule 1, Part II) reduce your income before you calculate AGI and before you choose between standard and itemized deductions. They're sometimes called "above-the-line" deductions and are generally more valuable because they reduce AGI (which affects eligibility for other tax benefits). Itemized deductions (Schedule A) are "below-the-line" and only help if they exceed your standard deduction amount.

For complete instructions and the latest information, visit IRS.gov/Form1040 or download the 2019 Schedule 1 instructions directly from IRS.gov.