What is Schedule 1-A?
Schedule 1-A is a new schedule for tax year 2025. It provides deductions for qualified tip income (Part II) and qualified overtime pay (Part III). Both deductions have dollar caps and MAGI phaseouts.
SupportedKey Lines
| Part | Line | Description |
|---|---|---|
| Part II — Tips | Line 1 | W-2 Box 7 tips (computed from W-2) |
| Line 7 | Capped at $25,000 | |
| Line 10 | MAGI phaseout threshold ($150K Single / $300K MFJ) | |
| Line 13 | Deductible tip amount (after cap and phaseout) | |
| Part III — Overtime | Similar | Capped at $12,500/$25,000, same phaseout |
| Line 38 | Total deduction → Form 1040 Line 13b |
How PaisaTax Handles It
- Partially computed — tip income pulls from W-2 Box 7 automatically; overtime may require preparer input
- Phaseout: $100 reduction per $1,000 of MAGI above the threshold
- Below-the-line deduction: Reduces taxable income on Form 1040 Line 13b (in addition to standard/itemized deduction)