Schedule 1, Additional Income and Adjustments to Income

This Schedule is an additional form that captures sources of income or deductions that aren't reported on your main 1040 tax form.

Additional Income: This part is where you report types of income not covered on the main Form 1040. Here are some common examples:

  • Alimony: If you received alimony payments you report that here. Note that, for divorce or separation agreements made or changed after 2018, alimony isn't deductible by the payer or taxable for the recipient.
  • Business income: If you're self-employed or run a small business, the profit from that is reported here. This usually comes from a Schedule C .
  • Rental real estate, royalties, partnerships, S corporations, trusts, etc.: Income from any of these sources is reported here. You'll typically fill out a Schedule E for these.
  • Unemployment compensation: If you received unemployment benefits, you report them here.

Adjustments to Income: These are also known as above-the-line deductions, which are deductions that you can take to reduce your overall taxable income. Some examples include:

  • Educator expenses: If you're a teacher and you've spent your own money on classroom supplies, you might be able to deduct some of those expenses.

  • Health Savings Account deduction: If you contribute to a Health Savings Account (HSA), you may be able to deduct these contributions.

  • Self-employment tax: If you're self-employed, you can deduct half of the Social Security and Medicare  taxes you paid here.

  • Student loan interest deduction: You can deduct the interest you paid on student loans during the year, up to $2,500.

After you've filled out the relevant parts of Schedule 1, you add the additional income to the income reported on Form 1040 and then subtract your adjustments to income. The result gives you your adjusted gross income (AGI), which you report on your Form 1040.