Schedule tax forms

In this article, we’ll take a closer look at the different Schedule tax forms you may encounter on your tax return. We’ll explain the purpose of each form and how it fits into the overall tax filing process.

There's no need for you to complete these forms yourself when filing with us. Our team of tax experts will handle all the necessary paperwork for you, using the information you've provided during the filing process.

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 completing the relevant sections of Schedule 1, the additional income is added to the income reported on Form 1040, and then adjustments to income are subtracted. The result is the adjusted gross income (AGI), which is reported on Form 1040.

Schedule 2, Additional Taxes

This schedule is used to report additional taxes owed that aren't covered on the main Form 1040.

Alternative minimum tax (AMT): A separate tax calculation designed to ensure that higher-income earners still pay a minimum amount of tax, especially if they have many deductions or tax credits that would otherwise lower their tax bill significantly.
Excess advance premium tax credit repayment: Applies if you receive health coverage through a Health Insurance Marketplace. If you received more Advance Premium Tax Credit than you qualify for based on your final yearly income, you might need to pay back the excess.
Self-employment tax: Social Security and Medicare tax for people who work for themselves. Normally, these taxes are split between employers and employees, but if you're self-employed, you're responsible for both portions.
Household employment taxes: If you paid a household employee (like a nanny or a housekeeper) more than a certain amount, you might owe this "Nanny tax."
Additional tax on IRAs, other qualified retirement plans, etc.: If you took an early distribution from a retirement plan or IRA, or if you didn't take a required minimum distribution, you might owe additional tax.
Net investment income tax: High-income taxpayers may be subject to an additional 3.8% tax on some or all of their net investment income.
Additional Medicare Tax: An additional 0.9% tax that applies to individuals with an income above a certain threshold.
Other taxes: Here, you can report taxes from Forms 8959, 8960, and other sources.

It is important to remember that not every section of Schedule 2 needs to be filled out—only those that apply to the individual's situation. After completing the relevant sections, all additional taxes should be totaled and included on the main Form 1040.

Schedule 3, Additional Credits and Payments

This Schedule is used to report certain tax credits and payments that aren't included in the main Form 1040.

Part I: Nonrefundable Credits: These credits can reduce the amount of tax you owe to zero, but won’t provide a refund if they're worth more than your total tax liability.. Common nonrefundable credits on Schedule 3 include:

Foreign tax credit: If you paid taxes to a foreign country.
Credit for child and dependent care expenses: If you paid someone to care for your child or another dependent while you worked or looked for work.
Education credits: There are two education credits (the American Opportunity Credit and the Lifetime Learning Credit) which may be available if you, your spouse, or your dependents attended post-secondary school.
Retirement savings contributions credit (saver's Credit): For lower-income taxpayers who contribute to a retirement plan.

Part II: Other payments and refundable credits: These credits are called “refundable” because if they reduce your tax liability below zero, you can receive the balance as a refund. They include:

Health coverage tax credit: Helps eligible individuals and families pay for certain types of health insurance coverage.
Excess Social Security and tier 1 RRTA tax withheld: If you had multiple employers and they collectively withheld too much Social Security tax or Railroad Retirement Tax Act (RRTA) tax, you can claim the excess here.
Credits from Form 2439, 8885, or other forms: Credits reported on these forms would be entered here.

After completing the relevant sections of Schedule 3, the credits and payments will be totaled and the amount will be included on Form 1040.

Schedule A, Itemized Deductions

This form allows you to detail specific expenses you incurred throughout the year that you want to deduct from your taxable income. It's an alternative to taking the standard deduction, which is a flat dollar amount that all taxpayers can deduct, regardless of their expenses.

You would typically choose to itemize your deductions on Schedule A if the total amount of your itemized deductions is greater than the standard deduction for your filing status.

Medical and dental expenses: Deductible out-of-pocket medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI). These expenses might include fees paid to doctors, dentists, surgeons, psychologists, and nontraditional medical practitioners; inpatient hospital care or residential nursing home care; and premiums for health insurance, to name a few.
State and local taxes: Deductible state, local income taxes, or sales taxes (but not both), plus property taxes. There's a limit to how much of these taxes you can deduct.
Interest you paid: Deductible mortgage interest paid on a loan secured by your main home or a second home. You may also be able to deduct investment interest expenses.
Gifts to charity: Donations to eligible charities. These can be cash but can also include property or even mileage driven for charitable service.
Casualty and theft losses: Property losses due to a theft or a federally declared disaster can be deducted here.

Schedule B, Interest and Ordinary Dividends

This form is used to list the interest and dividend income a taxpayer received during the tax year.

Interest: Lists the total interest income you received for the year. This might include interest from savings accounts, certificates of deposit (CDs), bonds, or any other type of investment. If you received more than $1,500 in total interest for the year, you're required to fill out this part of Schedule B. You need to list each payer (like a bank or corporation) separately, plus the amount they paid you.
Ordinary Dividends: Payments you receive from owning stocks or mutual funds. Just like with interest, if you received more than $1,500 in dividends during the year, you're required to fill out this section of Schedule B. You need to list each payer and the amount they paid you.

After listing and summing up all interest and dividends, the totals are carried over to Form 1040.

Remember, it's important to report all of your interest and dividend income, even if it's less than $1,500. Also, keep in mind that some interest and dividends can be tax-exempt or taxed at special rates.

Schedule C, Profit or Loss From Business

This form is used by self-employed individuals (i.e., freelancers, gig workers, or individuals who own their own businesses) to report income or loss from their business operations.

Part I - Income: All the money your business made during the tax year. This includes both cash and non-cash income.
Part II - Expenses: Lists the costs of doing business. These are all subtracted from your income.
Part III - Cost of goods sold: Calculate the cost of all goods sold during the year, which is also subtracted from your income. This involves listing your inventory at the beginning of the year, new purchases, and your inventory at the end of the year.
Part IV - Information on your vehicle: If you're claiming vehicle expenses, you'll need to provide information about your vehicle and its business use here.
Part V - Other expenses: Any business expenses that didn't fit into the categories in Part II.

Once all the relevant sections of Schedule C are completed, the net profit or loss (calculated by subtracting expenses and the cost of goods sold from income) is reported on Form 1040.

When filing with us, the deductions you’ve been tracking in the app will be automatically incorporated into this form along with your self-employed income.

Schedule D, Capital Gains and Losses

This schedule is used to report gains and losses from the sale or exchange of capital assets. Capital assets include things like stocks, bonds, and real estate.

If you sell a capital asset and make money because the selling price is higher than what you paid for it, you have a capital gain. If you sell a capital asset and lose money (the selling price is lower than what you paid for it), you have a capital loss.

Part I - Short-term capital gains and losses: Lists capital assets that you held for one year or less. This might include stocks or bonds you bought and sold within a single year. Short-term capital gains are taxed as ordinary income, so the rate can be quite high depending on your income.
Part II - Long-term capital gains and losses: Lists capital assets that you held for more than one year before selling. Long-term capital gains are usually taxed at a lower rate than short-term gains.
Part III - Summary: Combines your short-term and long-term gains and losses to calculate your net gain or loss. If you have a net capital loss, you can use it to offset other income you earned during the year, up to a certain limit.

Once Schedule D is completed, the net result is transferred to Form 1040. This result can either increase the taxable income (if there was a net gain) or decrease it (if there was a net loss).

Schedule E, Supplemental Income and Loss

This schedule is used for reporting income or loss from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in Real Estate Mortgage Investment Conduits (REMICs). These are forms of “‘passive income,”’ meaning income from business activities in which you don’t materially participate.

📝 If you have any income that needs to be reported on Schedule E, we can include it for you through our Premium subscription.

Part I - Income or loss from rental real estate and royalties: If you rent out property like a house, a condo, or an apartment, or if you receive royalties, you report that income here. You also get to deduct associated expenses, such as mortgage interest, property tax, operating expenses, depreciation, and repairs.
Part II - Income or loss from partnerships and S corporations: If you're a partner in a business partnership or a shareholder in an S corporation, you'll receive a Schedule K-1 that shows your share of the business's income or loss. Report that in this section.
Part III - Income or loss from estates and trusts: Beneficiaries of an estate or trust might receive a Schedule K-1 that reports their share of the income or loss. Report that here.
Part IV - Income or loss from real estate mortgage investment conduits (REMICs): "Residual interest holder" in a REMIC report income or loss from that interest here.
Part V - Summary: Summarizes the income or losses reported in the earlier sections. This summarized amount is then reported on your Form 1040.
Page 2: Used when you have income or loss from multiple rental properties, partnerships, S corporations, estates, trusts, or REMICs. Each property or entity is reported in a separate column.

Schedule F, Profit or Loss From Farming

This form is used to report the income and expenses from farming business.

📝 If you have farming income, we can support filing this through our Premium subscription.

Part I - Farm income – cash method: If you use the cash method of accounting (reporting income in the year you receive it and deducting expenses in the year you pay them), you report your farming income here. This could include money from selling livestock, produce, grains, and other products, or payments from agricultural programs.
Part II - Farm expenses: Deducts the costs of running your farm, such as feed, fertilizer, labor, veterinary expenses, and depreciation on farm equipment. These are subtracted from your income.
Part III - Farm income – accrual method: If you use the accrual method of accounting (reporting income in the year you earn it and deducting expenses in the year you incur them, even if you don't pay them that year), you report your farming income. This section includes adjustments for changes in inventory of livestock and produce.
Part IV - Principal agricultural activity codes: The code that best describes your farming business. There's a list of these codes in the Schedule F instructions.

After completing all the relevant sections of Schedule F, the net profit or loss (income minus expenses) is calculated and reported on Form 1040.

Schedule R, Credit for the Elderly or the Disabled

This form is designed for individuals who are either 65 or older, or those under 65 who are permanently and totally disabled. The purpose of this credit is to decrease the tax burden for these groups.

📝 We support filing Schedule R, Credit for the Elderly or the Disabled under the Premium subscription.

You qualify as disabled if you were under 65 at the end of the tax year and all three of the following statements are true:

You were permanently and totally disabled on the date you retired.
You receive taxable disability income for the tax year.
On January 1 of the tax year, you had not reached mandatory retirement age (the age at which your employer's retirement program would have required you to retire).

It's worth noting that permanently and totally disabled means that you can't engage in any substantial gainful activity because of a physical or mental condition, and a physician certifies that this condition has lasted or can be expected to last continuously for 12 months or more, or that the condition can be expected to lead to death.

Part I: This is where we determine if you're eligible for the credit. There are certain age and disability requirements, and you also have to fall under certain income limits. If you're married and filing jointly, both you and your spouse's age/disability status can affect eligibility.
Part II: A statement of permanent and total disability. It asks for confirmation that due to your continued disabled condition, you were unable to engage in any substantial gainful activity in the tax year.
Part III: If you're eligible, this is where you'll see calculations of the initial amount of your credit. The amount is based on your filing status and income. Adjustments to the initial amount will be based on nontaxable social security, pensions, annuities, or disability income. The more nontaxable income you have, the smaller your credit might be and your credit can't be more than your tax liability.

This credit is reported on your Form 1040 and could potentially reduce your tax bill, giving you a larger refund or reducing the amount you owe.

Schedule SE, Self-Employment Tax

This form is use to calculate and report the tax owed on net earnings from self-employment. Self-employment tax covers Social Security and Medicare taxes that are typically withheld from an employee's paycheck.

Part I — Self-Employment Tax: Here, we'll calculate your self-employment tax and deductible part of self-employment tax.
Part II — Optional Methods To Figure Net Earnings: This part provides two optional methods to calculate your net earnings, one for farm income and another for nonfarm income. These methods may be used under specific circumstances, such as if your income was not more than a certain amount or your profits were less than a specified amount.

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