Question

Ava reports income from a sole proprietorship and interest earned on savings accounts. In addition to the Form​ 1040, she will need to file

A.Schedule 1.

B.Schedule 2

C.Form 1099.

D.none of the above.

Answer 1

Hi There,

Here is my answer for the given question.

The correct answer for the given question is option A - Schedule 1

Schedule 1 of 1040:

It is a tax form that need to attach with federal tax return IRS Form 1040 when we have certain type of incomes and expenses that federal government will allow as deduction. It contains 2 parts.

Part 1:

• Taxable refunds, credits, or offsets of state and local income taxes
• Alimony received (date of divorce or separation agreement)
• Business income or loss (Schedule C or Schedule C-EZ)
• Capital gain or loss (Attach Schedule D, if required-Starting in 2019 list directly on the Form 1040 or 1040-SR Form not part of Schedule 1.)
• Other gains or losses (Attach Form 4797)
• Rental real estate, royalties, partnerships, S corps, trusts, etc. (Attach Schedule E)
• Farm income or loss (Attach Schedule F)
• Unemployment compensation
• Other Income (list type and amount)

Part 2:

• Educator expenses
• Certain business expenses of reservists, performing artists, and fee-basis government officials (Attach Form 2106)
• Health savings account deduction (Attach Form 8889)
• Moving expenses for members of the Armed Forces (Attach Form 3903)
• Deductible part of self-employment tax (Attach Schedule SE)
• Self-employed SEP, SIMPLE, and qualified plans
• Self-employed health insurance deduction
• Penalty on early withdrawal of savings
• Alimony paid (Recipient’s SSN and date of original divorce or separation agreement)
• IRA deduction
• Student loan interest deduction

So Ava have to file schedule 1 along with form 1040 and have to report business income and loss and interest income from saving bank account under part 1 of Schedule 1 shown above.

Hope you satisfied with my explanation. Thanks...! Have a nice day...!