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Schedule 1-A Guide: Filling Out the Tips and Overtime Parts

Tax year 2026 · Last updated · Maintained by the WattFlow team

Schedule 1-A is where you claim both deductions: Part II for tips (up to $25,000) andPart III for overtime (up to $12,500, or $25,000 joint).

Line numbers are from the 2025 form. The 2026 form may change them; we’ll update this page within 48 hours.

Part I: your income (lines 1–3)

Line 1 is your AGI. Lines 2a–2d add some income from abroad or U.S. territories; most people leave them blank. Line 3 is the total.

Part II: tips (lines 4–13)

LineWhat to enter
Line 4aTips on your W-2 (2025: box 7; 2026: code TP).
Line 4bTips on Form 4137, line 1, row A, column (c). Zero if you don’t file it.
Line 4cOne employer: the bigger of 4a or 4b. More employers or jobs: see the instructions.
Line 5Tips on 1099-NEC box 1, 1099-MISC box 3 or 1099-K box 1a. No more than your profit.
Line 6Line 4c + line 5.
Line 7The smaller of line 6 or $25,000.
Line 8–12Income (line 3) minus $150,000 ($300,000 joint). Divide by $1,000, round down, × $100.
Line 13Line 7 minus line 12, but not below 0. This is your tips deduction.

Part III: overtime (lines 14–21)

LineWhat to enter
Line 14aOvertime premium in W-2 box 1. For 2026, the code TT amount.
Line 14bOvertime on 1099-NEC box 1 or 1099-MISC box 3 (rare).
Line 14cLine 14a + line 14b.
Line 15The smaller of line 14c or $12,500 ($25,000 joint).
Line 16–20The same income reduction as Part II, worked out again.
Line 21Line 15 minus line 20, but not below 0. This is your overtime deduction.

Worked example: the income limit

Single, $162,500 income, $30,000 in tips:

  1. Line 7: $25,000

    The smaller of $30,000 or the $25,000 cap.

  2. Lines 10–11: 12

    $162,500 − $150,000 = $12,500. Divided by $1,000 is 12.5, rounded down to 12.

  3. Line 12: $1,200

    12 × $100.

  4. Line 13: $23,800

    $25,000 − $1,200. That’s the deduction.

Before you start

Not sure of your numbers? Try the overtime or tips calculator first.

Frequently asked questions

What is Schedule 1-A?

Schedule 1-A (Form 1040) is the form for the new OBBBA deductions: Part II for qualified tips, Part III for qualified overtime, plus parts for car loan interest and the senior deduction.

Do I need Schedule 1-A if I take the standard deduction?

Yes. These deductions are claimed on Schedule 1-A whether you take the standard deduction or itemize.

What is MAGI on Schedule 1-A?

Lines 1–3 give your modified adjusted gross income: your AGI plus some excluded foreign and territory income. For most people MAGI equals AGI.

How is the phase-out figured?

Subtract $150,000 ($300,000 joint) from MAGI, divide by $1,000, round down to a whole number, and multiply by $100. Subtract that from the capped amount; the deduction can’t go below zero.

Have the 2026 line numbers changed?

This guide uses the line numbers on the 2025 Schedule 1-A. Check the 2026 form when the IRS releases it; we will update this page within 48 hours.