Other Income: Form 1040 Line 6 and Schedule 1
Report "Other Income" on Form 1040 Schedule 1
“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 some form of "extra" money.
It's a catchall category for income sources that don't neatly fit anywhere else on a 1040 tax return. It's earnings other than wages or income from self-employment or investments.
The IRS has indicated that other income includes "any taxable income for which there is not a specific line identified."
These are typically one-and-done payments made to you for one reason or another that aren't likely to be repeated multiple times during the course of the tax year, if at all. And yes, this money is taxable.
Some Examples of Other Income
You’ll probably have to report "other income" if you receive money or goods that aren't included on a W-2 or on most 1099s. Think prizes and awards, Alaska Permanent Fund dividends, cancellation or forgiveness of credit card debt, jury duty pay, and lottery and other gambling winnings.
Some of these sources of income will indeed result in you receiving a 1099 of one type or another.
Additional sources of income that you might report as other income include:
- Cash earned from odd jobs
- Barter exchanges—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 Debts
Cancellation of a debt is typically reported 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.
The IRS says you must include foreign income as other income 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. Complete Form 2555 or Form 2555-EZ with your tax return. The IRS provides instructions for doing so, along with the qualifying criteria for claiming an exclusion.
What Isn't Other Income
Child support, Roth IRA distributions, gifts, and inheritances are exceptions to the other income 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 this tax, not the recipient.
- The federal government doesn't impose an inheritance tax.
- Fees received for serving as a notary public aren't considered other income.
You wouldn't 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. Businesses are required to issue 1099-MISC forms for aggregate payments of $600 or more during the tax year, or for royalties of $10 or more.
Earnings for which you don't receive a Form 1099-MISC are nonetheless considered income for tax purposes and must be reported on Schedule C. Not receiving a 1099-MISC is either an oversight on the part of the payer or it simply means that a 1099-MISC was not required because you earned less than the above thresholds. The income is still taxable to you.
How to Report Other Income
Other income is reported on line 21 of Schedule 1 of the 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 lines 1 through 5. You'll find the total on line 22 of Schedule 1.
The 2018 Form 1040, filed in 2019 for the 2018 tax year, is significantly different from the one you used for tax year 2017 when you filed in 2018. Virtually all information is 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 is changing the 1040 yet again for the 2019 tax year. It will still have additional numbered schedules, but only three rather than six. Other income is still expected to appear on Schedule 1, but on line 8 rather than line 21. It should transfer to line 7a of the 2019 Form 1040 rather than line 6 where it was entered for the 2018 tax year.
The IRS requires that you list “type and amount” on line 21 of the 2018 Schedule 1 and enter the total. For example, you'd enter $40 and “jury duty" if you were paid $40 for performing that service.
Enter the total and attach a statement to your tax return that itemizes what sources of income contributed to the total if you have many sources of other income during the course of the year.
You couldn't report "other income" on Forms 1040EZ or 1040A through 2017, and these forms were repealed in the 2018 tax year in any event. The new 2018 and 2019 Form 1040 tax forms replace them.
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.