Guides
Schedule 1 (Form 1040): Additional Income and Adjustments to Income
Schedule 1 (Form 1040) is the IRS form for reporting income that does not fit on the main Form 1040 and for claiming above-the-line deductions that reduce adjusted gross income (AGI). Part I totals your additional income and carries to Form 1040 line 8. Part II totals your adjustments to income and carries to Form 1040 line 10. You attach it only when you have items that belong on it.
The 2025 version (Attachment Sequence No. 01) keeps the two-part structure. Part I runs through line 10; Part II runs through line 26. A separate new form, Schedule 1-A, was added for the 2025 tax year to hold the tips, overtime, car loan interest, and enhanced senior deductions created by the One Big Beautiful Bill Act (OBBBA), and it feeds Schedule 1 rather than replacing it.
Who has to file Schedule 1
You must file Schedule 1 if you have any additional income listed in Part I or any adjustment listed in Part II. Common triggers include self-employment income (Schedule C), rental or partnership income (Schedule E), unemployment compensation, a state tax refund that is taxable, student loan interest, HSA contributions, or the deductible half of self-employment tax. Wage-only filers taking the standard deduction usually skip it.
Schedule 1 is a supporting schedule, not a standalone return. Its two subtotals flow into Form 1040: Part I to line 8 (added into total income) and Part II to line 10 (subtracted to reach AGI). If none of the numbered lines apply to you, you do not attach the form at all.
The 1099-K carve-out at the top of the form is separate from Parts I and II. If a Form 1099-K reported an amount in error or covered personal items sold at a loss, you enter that amount there so it can be backed out, then report the real transaction amount elsewhere on your return.
Part I: additional income
Part I collects income the main Form 1040 does not have a dedicated line for, then combines it into one figure. Lines 1 through 7 cover named categories (state refunds, alimony, business, rental, farm, unemployment). Line 8 (a through z) captures everything else. Line 9 totals line 8, and line 10 combines lines 1 through 7 plus line 9 and carries to Form 1040 line 8.
Business income on line 3 requires an attached Schedule C. Rental real estate, royalties, partnership, and S corporation income on line 5 requires Schedule E. Farm income on line 6 requires Schedule F. These attachments do the calculation; Schedule 1 only carries the result.
Alimony received (line 2a) is taxable income only for divorce or separation agreements executed on or before December 31, 2018. For agreements dated January 1, 2019 or later, the Tax Cuts and Jobs Act made alimony neither taxable to the recipient nor deductible by the payer, so it does not appear on the form. The date field on line 2b flags which rule applies.
State tax refunds (line 1) are taxable only to the extent you deducted state and local income taxes as an itemized deduction in the prior year and got a tax benefit. If you took the standard deduction last year, a state refund is generally not taxable and does not belong on line 1.
Line 8v handles digital assets received as ordinary income (mining, staking, airdrops, or crypto received as payment) that is not reported elsewhere. For the mechanics of reporting crypto disposals and cost basis, see the crypto tax accounting guide.
Common Part I line items
| Line | Item | Notes / attachment |
|---|---|---|
| 1 | Taxable refunds of state and local income taxes | Taxable only if you itemized and benefited last year |
| 2a | Alimony received | Taxable only for pre-2019 agreements; enter date on 2b |
| 3 | Business income or (loss) | Attach Schedule C |
| 4 | Other gains or (losses) | From Form 4797 or 4684 |
| 5 | Rental real estate, royalties, partnerships, S corps, trusts | Attach Schedule E |
| 6 | Farm income or (loss) | Attach Schedule F |
| 7 | Unemployment compensation | Check box and enter amount if you repaid a 2025 overpayment |
| 8b | Gambling winnings | Losses go on Schedule A, capped at winnings |
| 8c | Cancellation of debt | Often reported on Form 1099-C |
| 8g | Alaska Permanent Fund dividends | |
| 8i | Prizes and awards | |
| 8r | Scholarship and fellowship grants | Amounts not reported on Form W-2 |
| 8u | Wages earned while incarcerated | |
| 8v | Digital assets received as ordinary income | Not reported elsewhere |
| 8z | Other income | List type and amount |
Part II: adjustments to income
Part II holds above-the-line deductions, which reduce total income to arrive at AGI. You can claim these whether you take the standard deduction or itemize, because they are subtracted before the itemize-or-standard choice on Form 1040. Lines 11 through 23 cover named adjustments; line 24 (a through z) covers less common ones. Line 25 totals line 24, and line 26 adds lines 11 through 23 plus line 25, carrying to Form 1040 line 10.
Above-the-line status matters because a lower AGI can raise eligibility for income-tested credits and phaseouts. Adjustments such as HSA contributions (line 13), the deductible part of self-employment tax (line 15), self-employed retirement plans (line 16), and IRA contributions (line 20) reduce AGI directly, unlike itemized deductions on Schedule A.
Several adjustments carry statutory caps. Educator expenses (line 11) are limited to $300 per eligible educator for 2025 ($600 if both spouses are eligible educators filing jointly). Student loan interest (line 21) is capped at $2,500 and phases out at higher income. The self-employed health insurance deduction (line 17) cannot exceed net self-employment earnings from the related business.
Alimony paid (line 19a) is deductible only for pre-2019 agreements, mirroring the income rule on line 2a; you enter the recipient’s SSN on line 19b. Moving expenses (line 14) are limited to active-duty members of the Armed Forces moving under orders. Most other taxpayers lost the moving deduction under the TCJA through 2025.
For S corporation owners tracking basis before deducting pass-through losses, the interaction with Form 7203 shareholder basis can limit what flows through. Pass-through owners may also claim the Section 199A QBI deduction, which is taken on Form 1040 itself, not on Schedule 1.
Common Part II line items
| Line | Adjustment | 2025 limit / condition |
|---|---|---|
| 11 | Educator expenses | Up to $300 per eligible educator |
| 12 | Business expenses of reservists, performing artists, fee-basis officials | Attach Form 2106 |
| 13 | Health savings account deduction | Attach Form 8889 |
| 14 | Moving expenses | Armed Forces on active-duty orders only |
| 15 | Deductible part of self-employment tax | Attach Schedule SE; roughly half of SE tax |
| 16 | Self-employed SEP, SIMPLE, and qualified plans | |
| 17 | Self-employed health insurance deduction | Limited to net SE earnings |
| 18 | Penalty on early withdrawal of savings | From Form 1099-INT/1099-OID |
| 19a | Alimony paid | Pre-2019 agreements only; SSN on 19b |
| 20 | IRA deduction | Phases out if covered by a workplace plan |
| 21 | Student loan interest deduction | Capped at $2,500; income phaseout |
| 23 | Archer MSA deduction | Attach Form 8853 |
| 24z | Other adjustments | List type and amount |
Line 22 is reserved for future use on the 2025 form, so no entry is expected there.
How Schedule 1 flows into Form 1040
Schedule 1 produces two numbers that plug into Form 1040. Part I line 10 is added into total income at Form 1040 line 8. Part II line 26 is subtracted at Form 1040 line 10 to reach adjusted gross income. AGI then drives the standard-or-itemized deduction step and most income-based limits.
Because Part II reduces AGI directly, a $2,000 IRA deduction lowers taxable income by the full $2,000 regardless of whether you itemize. A $2,000 itemized deduction on Schedule A only helps if your total itemized deductions exceed the standard deduction. This is the practical reason above-the-line adjustments are valuable.
Schedule 1-A and the 2025 OBBBA deductions
Schedule 1-A is a new form for the 2025 tax year that holds four deductions created by the One Big Beautiful Bill Act: no tax on tips, no tax on overtime, car loan interest, and an enhanced senior deduction. Taxpayers claiming any of these complete Schedule 1-A, and the result carries onto the return alongside Schedule 1. These deductions are available whether you take the standard deduction or itemize.
The stated 2025 parameters include a tips deduction up to $25,000 (MAGI phaseout beginning above $150,000, or $300,000 for joint filers), an overtime deduction up to $12,500 ($25,000 joint), car loan interest on qualifying passenger vehicle loans, and an enhanced senior deduction up to $6,000 per person ($12,000 joint) for taxpayers born before January 2, 1961, phasing out above $75,000 MAGI ($150,000 joint). Amounts and phaseouts can change, so confirm against the current Form 1040 instructions before filing.
FAQ
Do I need to file Schedule 1 with my Form 1040?
You file Schedule 1 only if you have additional income in Part I (such as business, rental, unemployment, or gambling income) or an adjustment in Part II (such as HSA contributions, student loan interest, or self-employment tax). If none of the numbered lines apply and you are a wage earner taking the standard deduction, you can skip the form entirely.
What is the difference between Part I and Part II of Schedule 1?
Part I reports additional income that has no dedicated line on Form 1040, and its total (line 10) is added into total income at Form 1040 line 8. Part II reports adjustments to income, also called above-the-line deductions, and its total (line 26) is subtracted at Form 1040 line 10 to reach adjusted gross income.
Are Schedule 1 adjustments the same as itemized deductions?
No. Part II adjustments are above-the-line: they reduce AGI directly and can be claimed whether you itemize or take the standard deduction. Itemized deductions go on Schedule A and only help if they exceed the standard deduction. Because adjustments lower AGI, they can also raise eligibility for income-tested credits that Schedule A deductions do not.
Where does state tax refund income go on Schedule 1?
A taxable state or local income tax refund goes on Part I, line 1. The refund is taxable only to the extent you deducted those state and local income taxes as an itemized deduction in the prior year and received a tax benefit. If you took the standard deduction last year, a state refund is generally not taxable and does not appear on line 1.
Is alimony reported on Schedule 1?
Alimony received goes on line 2a and alimony paid goes on line 19a, but only for divorce or separation agreements executed on or before December 31, 2018. For agreements dated January 1, 2019 or later, alimony is neither taxable to the recipient nor deductible by the payer, so it is not reported on Schedule 1 at all. The date fields on the form confirm which rule applies.
How do I report crypto on Schedule 1?
Digital assets received as ordinary income, such as mining, staking, airdrops, or crypto received as payment, that are not reported elsewhere go on Part I, line 8v. Gains and losses from selling or exchanging crypto are reported separately on Form 8949 and Schedule D, not on Schedule 1. See the crypto tax accounting guide for cost basis and disposal reporting.
What is Schedule 1-A and how is it different from Schedule 1?
Schedule 1-A is a separate 2025 form that holds four new OBBBA deductions: no tax on tips, no tax on overtime, car loan interest, and an enhanced senior deduction. It feeds the return alongside Schedule 1 rather than replacing it. Schedule 1 continues to cover general additional income and traditional above-the-line adjustments.
Reviewed by The Ledgerism Editorial Team. Last reviewed: July 2026.