Other Income: Form 1040 Line 21
What You Should Report on Line 21 of Your 1040
“Other income” sounds like something we’d all love to have—extra financial streams into our households to do with 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. This income is reported on line 21 of Form 1040—and yes, it's taxable.
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." 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. Many retirement plan distributions are not taxed. Gifts might be taxed, but the donor is liable 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.
Some sources of income that you might report as other income include:
- Foreign earned income
- Cash earned from odd jobs
- Barter exchanges. Use the value of goods or services exchanged.
- Prizes like lottery winnings
- Canceled debts. You may receive Form 1099-Cs for these amounts, but they are nonetheless reported as other income
- Dividends on insurance policies if they exceed the premiums you paid
- Hobby income
- Recaptures of deductions you erroneously claimed on past tax returns
- Gambling winnings
- Jury duty pay
- Alaska Permanent Fund dividends. These may be reported on Form 1099-MISC, but the income should not go on Schedule C because it’s not self-employment income. Enter it as other income instead, or as unemployment compensation.
- Reimbursements for previously deducted expenses. See IRS Publication 525, page 19, "Recoveries"
- The taxable portions of disaster relief payments
- Distributions from a Coverdell education savings account (ESA) or a qualified tuition program (QTP).
How to Report Other Income
Other income goes on line 21 of your Form 1040 tax return. The IRS requires that you list “type and amount” here 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 can’t report "other income" on Forms 1040EZ or 1040A. If you receive money from any of these sources, you must file the longer Form 1040 so you can report it.
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.