What the Form Is For

Schedule 3 is a supplemental form you attach to your main Form 1040 or 1040-SR when filing your 2019 federal income tax return. Think of it as an overflow sheet for tax credits and payments that don't fit on the main form. For 2019, the IRS combined what used to be two separate schedules (the 2018 Schedules 3 and 5) into one streamlined document.

Part I: Nonrefundable Credits

The schedule has two distinct parts. Part I deals with nonrefundable credits—tax breaks that can reduce your tax bill to zero but won't generate a refund beyond what you've paid. These include credits for foreign taxes paid, child and dependent care expenses, education costs, retirement savings contributions, and residential energy improvements.

Part II: Other Payments and Refundable Credits

Part II covers other payments and refundable credits—money you've already paid to the IRS (like estimated tax payments) or credits that can result in a refund even if you owe no tax (like the premium tax credit for health insurance purchased through the Marketplace).

You only need Schedule 3 if you're claiming credits beyond the basic child tax credit or credit for other dependents, or if you made estimated tax payments, paid with an extension request, or have other special payments to report. Source

When You'd Use It (Including Late or Amended Returns)

You'll complete Schedule 3 when preparing your original 2019 tax return if any of the situations in the form apply to you. The standard filing deadline for 2019 returns was April 15, 2020. If you're filing late or preparing an amended return using Form 1040-X, you can still use Schedule 3 to claim credits you missed or correct errors in credits previously claimed.

Schedule 3 is particularly important if you received advance payments of the premium tax credit through the Health Insurance Marketplace in 2019—you're required to file a return with Schedule 3 to reconcile those advance payments, even if you wouldn't otherwise need to file. This is not optional; failing to reconcile can affect your eligibility for future premium assistance. Source

Key Rules and Changes for 2019

Simplified Format

Several important changes affected Schedule 3 for the 2019 tax year:

Simplified Format: The IRS consolidated two previous schedules into one, making filing more straightforward. Schedule 3 now captures both nonrefundable credits (formerly on 2018 Schedule 3) and payments/refundable credits (formerly on 2018 Schedule 5).

Income Limits

Income Limits: Several credits have income restrictions. For education credits, you cannot claim them if your modified adjusted gross income is $90,000 or more ($180,000 for married filing jointly). The retirement savings contributions credit phases out at $32,000 AGI ($48,000 for head of household, $64,000 for married filing jointly).

Required Forms

Required Forms: Nearly every line on Schedule 3 requires you to attach supporting forms. For example, Form 2441 for child and dependent care expenses, Form 8863 for education credits, Form 8880 for retirement savings credit, Form 5695 for energy credits, and Form 8962 for the premium tax credit. Don't forget these attachments—incomplete returns will be rejected or delayed.

Social Security Wage Threshold

Social Security Wage Threshold: For 2019, if you had multiple employers and earned more than $132,900 in total wages, you may have had excess Social Security tax withheld that you can claim back on line 11.

Extended Tax Provisions

Extended Tax Provisions: Some tax benefits that had expired were retroactively extended for 2019, including the tuition and fees deduction, mortgage insurance premium deduction, and various energy-related credits. Source

Step-by-Step (High Level)

Step 1: Determine If You Need Schedule 3

Review your tax situation. Do you have any credits other than the child tax credit? Did you make estimated tax payments? Did you have Marketplace health insurance? If yes to any, you'll need this schedule.

Step 2: Gather Supporting Forms

Before starting, collect all necessary forms and documentation: Forms 1116, 2441, 8863, 8880, 5695, 8962, receipts for qualifying expenses, and records of estimated tax payments.

Step 3: Complete Part I (Lines 1-7)

Work through each credit line-by-line. Enter amounts only for credits you qualify for. Each has specific requirements and supporting forms. Add lines 1 through 6, enter the total on line 7, and transfer this amount to Form 1040, line 13b.

Step 4: Complete Part II (Lines 8-14)

Enter your estimated tax payments, any extension payments you made, and calculate any excess Social Security tax withheld. If you had Marketplace insurance with advance premium payments, complete Form 8962 first, then enter the net premium tax credit on line 9. Add lines 8 through 13, enter the total on line 14, and transfer to Form 1040, line 18d.

Step 5: Attach Everything

Staple Schedule 3 and all supporting forms to your Form 1040 before mailing, or include them when e-filing. Source

Common Mistakes and How to Avoid Them

Missing Required Forms

Missing Required Forms: The most frequent error is claiming a credit on Schedule 3 without attaching the required supporting form. Always double-check that you've included Form 2441, 8863, 8880, 5695, 8962, or others as needed.

Foreign Tax Credit Calculation Error

Foreign Tax Credit Calculation Error: Many taxpayers claim more than allowed. You can only claim the smaller of your total foreign taxes paid or the foreign tax limitation calculated on your U.S. tax liability. If your foreign taxes exceed $300 ($600 joint), you must file Form 1116—no shortcuts.

Premium Tax Credit Reconciliation Oversight

Premium Tax Credit Reconciliation Oversight: Forgetting to reconcile advance premium tax credit payments is a critical error. If you received Form 1095-A from the Marketplace, you must file Form 8962 and Schedule 3, even if it results in repaying some of the advance payments.

Math Errors

Math Errors: Simple addition mistakes when totaling lines 1-6 or 8-13 are common. Use a calculator and double-check your work.

Income Limitation Oversights

Income Limitation Oversights: Claiming credits you don't qualify for because your income exceeds the threshold will trigger IRS adjustments. Review AGI limits carefully before claiming education or retirement savings credits. Source

What Happens After You File

Once you submit your return with Schedule 3, the IRS processes it along with your Form 1040. If you e-file, you'll typically receive acknowledgment within 24-48 hours that your return was accepted. Paper returns take longer—usually 6-8 weeks for processing.

The IRS computer systems automatically check your math and verify that claimed credits match attached forms. If everything checks out and you're due a refund (including refundable credits from Part II), expect your money within 21 days if you e-filed with direct deposit, or up to several weeks longer for paper returns or checks.

If there are discrepancies, the IRS will send you a notice explaining adjustments. For example, if you claimed education credits but your income exceeded the limit, they'll recalculate your tax and inform you of any balance due or reduced refund. Always respond to IRS notices promptly—they typically give you 30 days to reply. Source

FAQs

Q1: Do I need Schedule 3 if I only have the child tax credit?

No. The child tax credit and credit for other dependents go directly on Form 1040, line 13a. You only need Schedule 3 for additional credits beyond these.

Q2: Can I claim both the American Opportunity Credit and the Lifetime Learning Credit for the same student?

No. You can only claim one education credit per student per year. However, you can claim different credits for different students in the same tax year.

Q3: What if I forgot to claim a credit on my original 2019 return?

File Form 1040-X (Amended U.S. Individual Income Tax Return) with a corrected Schedule 3 and any required supporting forms. You generally have three years from the original filing deadline to claim a refund.

Q4: Is the premium tax credit on line 9 the same as the amount of advance payments I received?

Not necessarily. Line 9 shows the "net" premium tax credit after reconciliation. If your advance payments exceeded what you actually qualified for, you might have to repay some (reducing your refund or increasing tax owed). If you received less than you qualified for, line 9 gives you the additional credit.

Q5: Can I deduct my health insurance premiums on Schedule 3?

No. Schedule 3 doesn't handle premium deductions. Self-employed individuals deduct health insurance premiums on Schedule 1. The premium tax credit on Schedule 3 is specifically for subsidized Marketplace insurance, not a deduction for premiums paid.

Q6: What if I worked for two employers and had too much Social Security tax withheld?

Use line 11 to claim the excess. For 2019, if your total wages exceeded $132,900 and you had more than $8,239.80 in Social Security tax withheld, you can claim the excess. The worksheet in the Form 1040 instructions helps you calculate this.

Q7: Where can I get help completing Schedule 3?

Free tax preparation assistance is available through the Volunteer Income Tax Assistance (VITA) program for those earning under $56,000, and the Tax Counseling for the Elderly (TCE) program for those 60 and older. You can also use IRS Free File software if your AGI was $69,000 or less. Visit IRS.gov/FreeFile for more information. Source

Sources

For complete official instructions and forms, visit IRS.gov/Form1040 or access the 2019 Schedule 3 directly at IRS.gov.