Schedule I reports additional income and adjustments to income not listed on your personal tax return 1040. Primarily, Schedule I is to account for additional types of income outside of standard wages, salaries, or interest income. This includes business income, alimony, and certain types of dividends. Schedule 1 adjustments to income reduce your adjusted gross income without having to itemize deductions.
Part I - Additional Income
Line 3: Your business income will be listed here.
Line 5: If you are an S Corporation your business income will be listed here along with any income you received from your 1099s.
Some line items on Schedule 1 must be accompanied by an additional form or schedule, such as Schedule C to report income or loss from a business.
Part II - Adjustments to Income
Taxes and credits: A tax credit is a dollar-for-dollar reduction of your tax liability. Generally, after you've calculated your federal taxable income and worked out how much tax you owe, you can subtract the amount of any tax credit for which you are eligible from your tax obligation. Tax credits directly reduce the amount of tax you owe, while tax deductions reduce your taxable income.
Line 15: Deductible part of self-employment tax. Attach Schedule SE
Line 20: IRA deduction
Line 21: Student loan interest deduction
Line 26: The totals flow onto pg 1 of Form 1040 line 8
Please take a moment to review your tax return. If you discover any discrepancies or require additional clarification, inform your tax preparer. Having a clear understanding of your tax return will help you answer your tax preparer's questions and provide the necessary documents.