2020 Form 1040 Schedule 3 (Additional Credits And Payments): Paper-Filing Checklist
Why 2020 Schedule 3 Is Distinct
Schedule 3 for 2020 introduced two new lines—12b and 12e—to report COVID-19 pandemic-related qualified sick and family leave credits (Form 7202) and employer/self-employment payroll tax deferrals under the CARES Act. These coronavirus tax reliefs were form-year specific and do not appear in prior schedules.
Estimated tax payments, previously reported on Schedule 3, were moved to Form 1040 line 26 beginning in 2020, creating a structural reorganization of payment reporting.
2020 Year-Specific Programs Applicable to Schedule 3
Schedule 3 reports the net premium tax credit for taxpayers who received advance payments of premium tax credit (APTC) through the Health Insurance Marketplace and must reconcile that advance payment with the final credit claimed on Form 8962.
Qualified sick and family leave credits under the Families First Coronavirus Response Act (FFCRA) are reported on line 12b for eligible self-employed individuals filing Form 7202, and deferred payroll taxes under the CARES Act are reported on line 12e if applicable.
Ten-Step Paper-Filing Checklist for Schedule 3 (2020)
Step 1: Gather Supporting Documentation
Collect Form W-2 (wages), Form 1099 series (income), Schedule K-1 (partnership or S corp distributions), and Form 1095-A (Marketplace health insurance coverage) before beginning Schedule 3. For 2020, Form 1095-A is mandatory if any household member received advance payments of the premium tax credit through the Marketplace.
Step 2: Complete Form 8962 If Applicable
Suppose you or a family member enrolled in health insurance through the Health Insurance Marketplace for 2020, and advance premium tax credit (APTC) payments were made to your insurance provider.
In that case, you must complete Form 8962 to reconcile the advance payments with your actual premium tax credit. Enter the net premium tax credit from Form 8962, line 26, on Schedule 3, line 8.
Step 3: Report Nonrefundable Credits on Part I (Lines 1–7)
Complete lines 1 through 6 for any of the following 2020 nonrefundable credits: foreign tax credit (Form 1116), child and dependent care expenses (Form 2441), education credits from Form 8863, retirement savings contributions credit (Form 8880), residential energy credits (Form 5695), or other credits from Form 3800 (general business credit), Form 8801 (prior year minimum tax), or similar supporting forms.
Add lines 1–6 and enter the total on line 7. Transfer the line 7 amount to Form 1040 (or Form 1040-SR), line 20.
Step 4: Report Net Premium Tax Credit on Part II, Line 8
If you completed Form 8962 for 2020 Marketplace health insurance, enter the net premium tax credit from Form 8962, line 26, on Schedule 3, line 8. Attach Form 8962 to your return. This is the first item in Part II (refundable and other credits).
Step 5: Report Extension Payment and Excess Withholding (Lines 9–11)
On line 9, enter any amount paid with Form 4868 (request for extension to file). On line 10, enter excess social security tax or tier 1 Railroad Retirement Tax Act (RRTA) tax withheld (this typically applies only if you had multiple jobs in 2020). On line 11, enter the federal tax credit on fuels (Form 4136) if applicable. Most taxpayers leave lines 9 through 11 blank.
Step 6: Report Qualified Sick and Family Leave Credits (Line 12b)
For the 2020 tax year only, if you are self-employed and took qualified sick or family leave due to COVID-19 under the FFCRA, complete Form 7202 to calculate the refundable credit for sick leave or family leave equivalent to what you would have received as an employee.
Enter the total of lines 24 and 35 from Form 7202 on Schedule 3, line 12b. Attach Form 7202. If you also receive wages as an employee and your employer reported qualified sick leave wages on your Form W-2, those wages are reported on Schedule H, line 8e. If household employment taxes are involved, attach Schedule H and include the refundable portion on line 12b.
Step 7: Report Other Credits, Deferrals, and Health Coverage (Lines 12a, 12c, 12d, 12e)
On line 12a, enter any undistributed capital gains shown on Form 2439. On line 12c, enter health coverage tax credit from Form 8885 (for eligible individuals).
On line 12e, enter deferral of specific Schedule H or SE (self-employment tax) filers: if you deferred the employer share of social security tax for 2020 under the CARES Act provision, report the maximum allowable deferral amount here; half is due December 31, 2021, and half is due December 31, 2022.
On line 12d, report other payments or refundable credits not listed. Add lines 12a–12e and enter the total on line 12f.
Step 8: Calculate Total Part II Refundable Credits and Payments (Line 13)
Add lines 8 through 12f and enter the total on Schedule 3, line 13. This total is transferred to Form 1040 (or Form 1040-SR), line 31, and is used to calculate your final tax or refund.
Step 9: Attach All Required Supporting Forms and Schedules
Attach Schedule 3 to your primary return (Form 1040, Form 1040-SR, or Form 1040-NR). Include Form 1116 (if line 1 is completed), Form 2441 (if line 2 is completed), Form 8863 (if line 3 is completed), Form 8880 (if line 4 is completed), Form 5695 (if line 5 is completed), Form 3800, Form 8801 (if line 6 is completed), Form 8962 (if line 8 is completed), Form 4136 (if line 11 is completed), Form 2439 (if line 12a is completed), Form 7202 and Schedule H if applicable (if line 12b is completed), and Form 8885 (if line 12c is completed).
For 2020, do not attach Form 1095-A to your return; retain it for your records.
Step 10: Sign, Date, and File
Sign and date Form 1040 (or Form 1040-SR or Form 1040-NR), along with Schedule 3 attached, under penalties of perjury. Include your valid Social Security number on Schedule 3 as shown on your primary return.
Paper-file your complete return and all schedules to the IRS. See the IRS Where to File page for Form 1040 and its schedules for the correct mailing address for your filing status and state of residence in 2020.
Form-Specific Limitations for 2020 Schedule 3
Nonrefundable credits (Part I) reduce your 2020 tax liability to zero but do not generate a refund if the credit exceeds your tax. Refundable credits (Part II) can result in a refund if they exceed your tax liability.
Form 1040-NR filers (nonresident aliens) cannot claim certain credits, such as education credits or the recovery rebate credit; consult Form 1040-NR instructions to verify eligibility before completing Schedule 3.
Married filing separately filers must ensure each spouse completes a separate Schedule 3 and reconciles calculations for certain dependent-related credits.
Lines Added, Removed, or Redesigned for 2020
Line 12b—Added for 2020: Prior year: Estimated tax payments were reported on Schedule 3 line 8. Current year: Line 12b is new, and reports qualified sick and family leave credits for self-employed individuals from Form 7202 and Schedule H. This reflects the FFCRA provision enacted in response to the COVID-19 pandemic.
Line 12e—Added for 2020: Prior year: Not applicable. Current year: Line 12e is new and allows for the deferral of employer and self-employment tax payments under the CARES Act; half of the deferred amounts are due by December 31, 2021, and the other half is due by December 31, 2022. This provision is specific to the 2020 tax year employment tax obligations.
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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.
