How to Claim Overtime, Tips, Car Loan and Senior Deductions on Schedule 1-A

Last reviewed November 14, 2026 · Figures checked against official sources · How we verify

Part I: MAGI (lines 1–3)

• Line 1: Form 1040 line 11b.
• Lines 2a–2d: excluded Puerto Rico income, Form 2555 lines 45 and 50, Form 4563 line 15. Most people leave these blank.
• Line 3: add lines 1 and 2e. This is carried into each later part.

Part II: No Tax on Tips (lines 4–13)

• Line 4a: qualified tips included in W-2 box 7 (with adjustments if box 5 is more than $176,100, or you had tips not subject to Social Security and Medicare taxes).
• Line 4b: qualified tips on Form 4137.
• Line 4c: the larger of 4a and 4b if you had one employer; see instructions for multiple employers or occupations.
• Line 5: qualified tips from 1099-NEC box 1, 1099-MISC box 3 or 1099-K box 1a. Don't enter more than net profit from the business.
• Lines 6–7: add 4c and 5; take the smaller of that and $25,000.
• Lines 8–13: the phase-out: MAGI minus $150,000 ($300,000 joint), divide by $1,000 and round down, multiply by $100, subtract from line 7.

Part III: No Tax on Overtime (lines 14a–21)

• Line 14a: qualified overtime compensation included in W-2 box 1.
• Line 14b: qualified overtime from a 1099-NEC or 1099-MISC (see instructions).
• Line 15: smaller of line 14c or $12,500 ($25,000 joint).
• Lines 16–21: same phase-out math as tips, using $150,000 / $300,000.

Part IV: No Tax on Car Loan Interest (lines 22–30)

• Line 22: VIN of each applicable passenger vehicle and interest columns: (ii) deducted elsewhere on Schedule C, E or F; (iii) the Schedule 1-A amount.
• Lines 23–24: add column (iii); smaller of that or $10,000.
• Lines 25–30: MAGI minus $100,000 ($200,000 joint), divide by $1,000 and round up, multiply by $200, subtract.

Part V: Enhanced Deduction for Seniors (lines 31–37)

• Lines 31–35: MAGI minus $75,000 ($150,000 joint); multiply by 6%; subtract from $6,000.
• Line 36a: your amount if you have a valid SSN and were born before January 2, 1961.
• Line 36b: your spouse's amount, if married filing jointly with a spouse who meets the same tests.
• Line 37: total senior deduction.

Part VI: Total (line 38)

Add lines 13, 21, 30 and 37 and enter the result on Form 1040 or 1040-SR line 13b.

Documents to gather

• W-2s (2026 forms use box 12 codes TP and TT and box 14b for the tipped occupation code), 1099s and Form 4137.
• Pay stubs or employer statements for qualified overtime and tips on a 2025 return.
• Loan statement, VIN and vehicle label for car loan interest.
• Social Security numbers for everyone claimed.