Form 1040 Schedule 1 Filing Checklist for Tax Year 2020
Overview and Key Provisions
Schedule 1 reports additional income and adjustments to income not captured on the simplified Form 1040. For 2020, Schedule 1 gained critical importance due to the American Rescue Plan Act unemployment compensation exclusion, which allowed eligible taxpayers to exclude up to $10,200 of unemployment benefits if their modified adjusted gross income fell below $150,000.
The standard deduction for 2020 is $12,400 for single filers and $24,800 for married filing jointly. Schedule 1 must be filed by taxpayers reporting self-employment income, rental income, unemployment compensation, or claiming above-the-line deductions such as educator expenses, student loan interest, or IRA contributions.
Part I: Additional Income Reporting
Step 1: Report State and Local Tax Refunds
Enter taxable refunds, credits, or offsets of state and local income taxes on line 1. This applies if you received a refund in 2020 and itemized deductions in the prior year when those taxes were paid.
Step 2: Report Alimony Received
Enter alimony received on line 2a only if your divorce or separation agreement was executed before January 1, 2019. Enter the agreement date on line 2b. Under the Tax Cuts and Jobs Act, alimony from agreements executed on or after January 1, 2019, is not taxable income and should not be reported.
Step 3: Report Business Income or Loss
Complete Schedule C showing all business revenues and expenses. Enter net profit or loss from Schedule C line 31 on Schedule 1 line 3. Attach Schedule C to your return. The net profit is also reported on Schedule SE for self-employment tax calculation.
Step 4: Report Gains or Losses from Business Property
Complete Form 4797 for sales of business property, depreciable business assets, or business real estate. Enter the net gain or loss on line 4. Attach Form 4797. Do not include personal investment capital gains here.
Step 5: Report Rental and Pass-Through Income
Complete Schedule E for rental properties, royalties, partnerships, S corporations, and trusts. Include all Schedule K-1 forms received. Enter combined income or loss from Schedule E line 41 on Schedule 1 line 5. Attach Schedule E and all Schedule K-1 forms.
Step 6: Report Farm Income or Loss
Complete Schedule F showing farm revenues and expenses. Enter net profit or loss from Schedule F line 34 on Schedule 1 line 6. Attach Schedule F. If you sold livestock due to weather-related conditions, you may elect to defer income by checking the appropriate box on Schedule F line 6c.
Step 7: Report Unemployment Compensation
Enter total unemployment compensation from all Forms 1099-G on line 7. For 2020, complete the Unemployment Compensation Exclusion Worksheet to determine eligibility for the American Rescue Plan Act exclusion.
Calculate modified AGI by subtracting unemployment compensation from your adjusted gross income. If modified AGI is less than $150,000, you may exclude up to $10,200 of unemployment compensation. For married filing jointly, each spouse can exclude up to $10,200 of their respective unemployment compensation if the joint modified AGI is below $150,000, allowing a potential combined exclusion of $20,400.
Enter the excludable amount in parentheses on the dotted line next to line 8, labeled UCE. Enter the net amount after exclusion on line 8.
Step 8: Report Other Income
List type and amount of any income not reported on lines 1 through 7 on line 8. Examples include prizes, awards, gambling winnings, jury duty pay, taxable scholarships not on Form W-2, and particular canceled debt.
Step 9: Calculate Total Additional Income
Add lines 1 through 8 and enter the total on line 9. Transfer this amount to Form 1040 line 8.
Part II: Adjustments to Income
Step 10: Claim Educator Expenses
Enter up to $250 of unreimbursed educator expenses on line 10 if you are a kindergarten through grade 12 teacher, instructor, counselor, principal, or aide who worked at least 900 hours during the school year. Qualified expenses include books, supplies, computer equipment, software, and classroom materials.
If married filing jointly and both spouses are eligible educators, the maximum combined deduction is $500, but neither spouse can claim more than $250 individually. Do not include expenses your employer reimbursed.
Step 11: Report Certain Business Expenses
Complete Form 2106 if you are an Armed Forces reservist with travel expenses exceeding 100 miles from home, a qualified performing artist meeting specific criteria, or a fee-basis government official. Enter allowable expenses from Form 2106 on line 11. Attach Form 2106.
Armed Forces reservists can deduct unreimbursed travel expenses incurred in connection with reserve duties. Qualified performing artists must meet all four requirements: performing for at least two employers, receiving $200 or more from at least two employers, incurring expenses exceeding 10 percent of performing arts income, and maintaining an AGI of $16,000 or less before the deduction.
Step 12: Claim Health Savings Account Deduction
Complete Form 8889 showing HSA contributions and high-deductible health plan coverage. Enter deductible HSA contribution from Form 8889 line 13 on line 12. Attach Form 8889. You must be an eligible individual covered by a high-deductible health plan to claim this deduction.
Step 13: Report Moving Expenses for Armed Forces
Complete Form 3903 only if you are an active-duty member of the Armed Forces with permanent change of station orders. Enter unreimbursed moving expenses from Form 3903 line 3 on line 13. Attach Form 3903.
For 2020, the mileage rate for moving via personal vehicle is $0.17 per mile. Civilian taxpayers and non-active-duty military cannot claim this deduction for tax years after 2017.
Step 14: Deduct Half of Self-Employment Tax
Complete Schedule SE calculating self-employment tax. Enter one-half of the self-employment tax from Schedule SE line 6 on line 14. This deduction prevents double taxation, as self-employed individuals pay both the employee and employer portions of Social Security and Medicare taxes. Attach Schedule SE.
Step 15: Report Self-Employed Retirement Contributions
Enter contributions to SEP-IRAs, SIMPLE plans, or qualified self-employed retirement plans on line 15. Contributions must be calculated using worksheets in Publication 560 that account for the self-employment tax deduction and reduced contribution rate.
Step 16: Deduct Self-Employed Health Insurance
Enter premiums for medical, dental, vision, and qualified long-term care insurance for yourself, spouse, and dependents on line 16. The deduction cannot exceed net self-employment income minus one-half of the self-employment tax. Complete Form 7206 if you have multiple trades or businesses.
Step 17: Report Early Withdrawal Penalties
Enter penalties for early withdrawal from certificates of deposit or similar savings accounts on line 17. Financial institutions report these penalties on Form 1099-INT.
Step 18: Claim Alimony Paid
Enter alimony paid on line 18a only if your divorce or separation agreement was executed before January 1, 2019. Enter the recipient’s Social Security number on line 18b and the agreement date on line 18c. Failure to provide the recipient’s SSN results in a $50 penalty and may cause a deduction disallowance.
If paying alimony to multiple recipients, enter one SSN on line 18b and attach a statement with all recipients’ SSNs and amounts. Alimony paid under agreements executed on or after January 1, 2019, is not deductible.
Step 19: Deduct IRA Contributions
Enter traditional IRA contributions on line 19. The deduction phases out at specific AGI thresholds if an employer retirement plan covers you or your spouse.
For 2020, IRA deduction phaseout ranges are:
- Single or Head of Household with workplace plan: $65,000 to $75,000
- Married Filing Jointly with active participant: $104,000 to $124,000
- Married Filing Jointly with spouse covered but taxpayer not: $196,000 to $206,000
- Married Filing Separately with active participant: $0 to $10,000
Beginning in 2020, the age restriction for making traditional IRA contributions was removed. Taxpayers of any age can contribute to traditional IRAs if they have earned income.
Step 20: Deduct Student Loan Interest
Enter up to $2,500 of qualified student loan interest paid on line 20. The deduction phases out for 2020 between $70,000 and $85,000 modified AGI for single filers and between $140,000 and $170,000 for married filing jointly.
The deduction is not available if you are married and filing separately. Lenders report interest of $600 or more on Form 1098-E. Qualified loans must be taken for your own education or for your dependent’s education. Parent PLUS loans generally do not qualify.
Step 21: Claim Tuition and Fees Deduction
Complete Form 8917 for qualified tuition and fees paid for yourself, spouse, or dependents attending eligible institutions. Enter the deduction on line 21. Attach Form 8917.
For 2020, the tuition and fees deduction was retroactively extended by the Consolidated Appropriations Act, 2021. The maximum deduction is $4,000 if the modified AGI is $65,000 or less for single filers or $130,000 or less for married filing jointly. A $2,000 deduction is available if MAGI is between $65,001 and $80,000 for single filers or $130,001 and $160,000 for married filing jointly.
Qualified expenses include tuition and mandatory enrollment fees but exclude room, board, and books unless required for purchase from the institution. You cannot claim this deduction and education credits for the same student or expenses in the same tax year.
Step 22: Calculate Total Adjustments
Add lines 10 through 21 and enter the total on line 22. Transfer this amount to Form 1040 line 10a to reduce your adjusted gross income.
Final Assembly
Verify that all required forms are attached, including Schedule C, Form 4797, Schedule E, Schedule F, Form 2106, Form 8889, Form 3903, Schedule SE, and Form 8917, as applicable.
Confirm that the name and Social Security number on Schedule 1 match precisely with the information on Form 1040. Verify line 9 total transfers correctly to Form 1040 line 8, and line 22 total transfers correctly to Form 1040 line 10a.
Attach Schedule 1 directly behind Form 1040 or Form 1040-SR as the first numbered schedule. File by April 15, 2021, or request an extension. Retain all supporting documentation for at least three years.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
