What Is Schedule 1 (Form 1040): Additional Income and Adjustments

Schedule 1 of Form 1040 is a one-page IRS attachment where you report income that doesn’t have its own line on the main return and claim specific deductions that lower your adjusted gross income. It has two parts. Part I lists additional income like freelance earnings, unemployment, and taxable refunds. Part II lists above-the-line adjustments like student loan interest, HSA contributions, and the deductible half of self-employment tax. If you have anything that belongs on either part, you attach Schedule 1 to your 1040.

Who Needs to File Schedule 1

You only attach it if you have something to put on it. A filer whose income is entirely W-2 wages and bank interest, with none of the Part II adjustments, can skip the form entirely. But the triggers are common. Any one of these means Schedule 1 is required:

  • Part I triggers: freelance or gig income, taxable state or local tax refunds, alimony received under pre-2019 agreements, unemployment benefits, rental or royalty income, farm income, gambling winnings, or prize money.
  • Part II triggers: educator expenses, HSA contributions, the self-employment tax deduction, IRA contributions, student loan interest, or alimony paid under pre-2019 agreements.

Tax software generates Schedule 1 automatically the moment you enter data that belongs on it, so most filers never touch the form directly.1Internal Revenue Service. Schedule 1 (Form 1040) 2025

What Goes in Part I: Additional Income

Part I collects income the IRS taxes but that doesn’t fit on the main 1040. The most common entries:

Taxable State and Local Refunds

If you itemized last year and later received a refund of state or local income taxes, that refund is taxable this year and goes on line 1. If you took the standard deduction last year, the refund isn’t taxable and you skip the line.2Internal Revenue Service. Taxable Refunds, Credits or Offsets of State or Local Income Taxes

Alimony From Pre-2019 Agreements

Alimony you received under a divorce or separation agreement finalized before January 1, 2019, is taxable income reported on Schedule 1. Agreements executed after that date follow different rules: the recipient owes no tax and the payer takes no deduction.3Internal Revenue Service. Topic No. 452, Alimony and Separate Maintenance An older agreement modified after 2018 usually keeps the original treatment unless the modification specifically adopts the new rules.4Internal Revenue Service. Divorce or Separation May Have an Effect on Taxes

Self-Employment, Rental, and Farm Income

Net profit or loss from Schedule C (freelance, contract, and sole-proprietor work) flows to line 3. Rental and royalty income from Schedule E lands on line 5. Farm income from Schedule F goes on line 6. In each case, the net figure from the underlying schedule is what appears on Schedule 1.1Internal Revenue Service. Schedule 1 (Form 1040) 2025

Unemployment Benefits

All unemployment compensation is taxable under federal law, whether the payment came from a state or federal program. It goes on line 7.5Office of the Law Revision Counsel. 26 USC 85 – Unemployment Compensation Your state agency issues Form 1099-G showing the total paid to you during the year.

Gambling Winnings and Other Miscellaneous Income

Gambling winnings of any kind, including lottery, casino, sports betting, and raffles, are fully taxable and go on line 8b. The IRS requires reporting all winnings, not just amounts on a Form W-2G.6Internal Revenue Service. Topic No. 419, Gambling Income and Losses Line 8 also captures jury duty pay, prizes, and canceled debt.

Once Part I is totaled, the sum transfers to line 8 of Form 1040 and combines with your wages and other basic income.

What Goes in Part II: Adjustments to Income

Part II is where the form saves you money. These adjustments are above-the-line, meaning they reduce your AGI whether you itemize or take the standard deduction. A lower AGI can also open up credits and deductions that phase out at higher income levels.

Educator Expenses

Qualified K–12 teachers, counselors, and principals who work at least 900 hours during the school year can deduct up to $300 in unreimbursed classroom expenses. Two eligible educators filing jointly can claim up to $600, capped at $300 each. Qualifying purchases include books, supplies, computer equipment, and professional development courses.7Internal Revenue Service. Topic No. 458, Educator Expense Deduction

Health Savings Account Contributions

Personal contributions to an HSA are deductible if you have a high-deductible health plan. For 2026, the annual limit is $4,400 for self-only coverage, with a higher limit for family coverage.8Internal Revenue Service. IRS Notice: 2026 HSA Limits Employer contributions don’t go here because they’re already excluded from your W-2 wages.9Office of the Law Revision Counsel. 26 USC 223 – Health Savings Accounts

Self-Employment Tax Deduction

Self-employed workers pay both the employee and employer shares of Social Security and Medicare. You can deduct 50% of your self-employment tax on Schedule 1. The amount is calculated on Schedule SE and carried over.10Internal Revenue Service. Topic No. 554, Self-Employment Tax

IRA Contributions

Traditional IRA contributions may be deductible up to $7,500 for 2026, or $8,600 if you’re 50 or older.11Internal Revenue Service. Retirement Topics – IRA Contribution Limits The deduction phases out at higher income levels if you or your spouse are covered by a workplace retirement plan. Roth IRA contributions are never deductible here.

Student Loan Interest

You can deduct up to $2,500 in interest paid on qualified education loans. For 2025 returns, the deduction begins phasing out at $85,000 of modified AGI for single filers ($170,000 joint) and disappears entirely at $100,000 ($200,000 joint).12Internal Revenue Service. Publication 970 (2025), Tax Benefits for Education Your loan servicer issues Form 1098-E showing interest paid.13Internal Revenue Service. About Form 1098-E, Student Loan Interest Statement Married filing separately disqualifies you.

Other Adjustments

Part II also covers penalties on early withdrawal of savings (like breaking a CD before maturity), alimony paid under pre-2019 agreements, and moving expenses for active-duty military. Each has its own line and reduces AGI dollar for dollar.

The Part II total moves to line 10 of Form 1040, where it’s subtracted from gross income to produce your adjusted gross income.

Schedule 1-A Is a Separate Form

Starting with the 2025 tax year, the IRS introduced Schedule 1-A as a companion form. It came out of the One, Big, Beautiful Bill Act signed on July 4, 2025, and is where eligible taxpayers claim deductions for tip income, overtime pay, auto loan interest, and a new deduction for certain seniors.14Internal Revenue Service. IRS Published Schedule Taxpayers Will Use to Claim Deductions on No Tax on Tips, No Tax on Overtime, No Tax on Car Loans, No Tax on Seniors Those deductions do not go on Schedule 1. If you qualify, you file both schedules with your 1040.15Internal Revenue Service. One, Big, Beautiful Bill Provisions

Documents to Have Ready

Pull only the forms that match your situation:

How to File It

Tax software attaches Schedule 1 automatically once you enter data that maps to it, so you won’t manually place any numbers on line-by-line entries. Paper filers can download the form from irs.gov and place it behind Form 1040 in the mailing packet.1Internal Revenue Service. Schedule 1 (Form 1040) 2025 Keep a copy of Schedule 1 with your complete return for at least three years, the standard IRS record-retention period for most taxpayers.18Internal Revenue Service. How Long Should I Keep Records?