Other Income: Form 1040 Line 6 and Schedule 1
Sources of Income That Qualify as "Other Income" and How to Report Them
“Other income” sounds like something we’d all love to have—extra financial streams into our households to spend as we see fit. In tax terms, this isn't far off. Other income is indeed usually "extra" money. It's a catchall category for income sources that don't neatly fit anywhere else on a 1040 tax return the way wages, self-employment income, or investments do.
Think one-and-done payments made to you for one reason or another that are not likely to be repeated multiple times during the course of the tax year, if at all. And yes, this money is taxable.
The IRS indicates that other income "includes any taxable income for which there is not a specific line identified."
Examples of Other Income
If you receive money or goods that are not included on a W-2 or most 1099s, you’ll probably have to report it as "other income." Think prizes and awards, Alaska Permanent Fund dividends, cancellation or forgiveness of credit card debt, jury duty pay, and lottery and other gambling winnings.
Additional sources of income that you might report as other income include:
- Foreign income
- Cash earned from odd jobs
- Barter exchanges—use the value of goods or services exchanged.
- Dividends on insurance policies if they exceed the premiums you paid
- Hobby income
- Recaptures of deductions you erroneously claimed on past tax returns
- Reimbursements for previously deducted expenses
- The taxable portions of disaster relief payments
- Distributions from a Coverdell education savings account (ESA) or a qualified tuition program (QTP)
Cancellation of a debt is typically imported by the lender on Form 1099-C, then submitted to the IRS with a copy sent to you. It's nonetheless reportable as other income if you were solvent at the time the debt was forgiven—the value of your assets was more than your liabilities. The IRS provides an Insolvency Determination Worksheet to help you determine if you were, indeed, solvent.
As for foreign income, the IRS says you must include it, even if you paid taxes on it to another country. Convert the total to U.S. dollars, then enter the U.S. figure on your tax return. You might be eligible to exclude some or all of this income from your taxable income, however. You must complete Form 2555 or Form 2555-EZ with your tax return. The IRS provides instructions for doing so, along with the qualifying criteria.
What Isn't Other Income
Child support, Roth IRA distributions, gifts, and inheritances are exceptions to the rule. Child support is tax-neutral—it’s neither deductible to the parent paying it nor reportable by the parent receiving it. Roth retirement plan distributions aren't taxed because contributions were made with after-tax dollars. Gifts might be taxed, but the donor is liable fort his tax in most cases, not the recipient, and the federal government does not impose an inheritance tax.
You would not report self-employment income as other income, even if you don’t receive a 1099-MISC for payments you received. This income is reported on Schedule C, Profit or Loss From Business, if you're an independent contractor or sole proprietor.
Fees received for serving as a notary public aren't considered other income, either.
How to Report Other Income
This income is reported on line 21 of Schedule 1 of the new 2018 Form 1040, then transferred to line 6 of the 1040 itself, along with the total of all other sources of income you included on that schedule. You'll find the total on line 22 of Schedule 1.
The 2018 Form 1040 is significantly different from the one you used in 2018 for tax year 2017. Virtually all information is now entered on different schedules and lines. This information pertains to the tax return you'll complete in 2019 for the 2018 tax year.
The IRS requires that you list “type and amount” on line 21 of Schedule 1 and enter the total. If you were paid $40 for performing jury duty, enter $40 and “jury duty.” If you have many sources of other income during the course of the year, enter the total and attach a statement to your tax return that itemizes what sources of income contributed to that total.
You couldn't report "other income" on Forms 1040EZ or 1040A in previous years, and these forms are no longer available for the 2018 tax year in any event—the new tax form replaces these, too.
NOTE: Tax laws change periodically, and you should consult with a tax professional for the most up-to-date advice. The information contained in this article is not intended as tax advice and is not a substitute for tax advice.