Common questions about additional income on Schedule 1 in Lacerte

Below, you'll find questions to frequently asked questions about Schedule 1 in Lacerte.

How do I enter state or local tax refunds for line 1?

If you know the refund should be taxable:

1. Go to Screen 14.2, State Tax Refunds,Unemployment Comp. (1099-G).
2. Click the blue State Refund Wksht link from the left navigation menu.
3. Enter the amount for Schedule 1, line 1 in the Income tax refunds, if itemized last year [O] field.

If you aren't sure if/how much of the refund is taxable, leave the override fields blank and check the box labeled Itemized in 2023 and enter the Amounts from 2023 Return subsection. Lacerte will calculate the taxable portion of the refunds received and print the result, if any, on line 1. 

Refer to this article for more information on how the State and Local Tax Refunds Taxable Worksheet calculates.

How do I enter alimony received for line 2a?

1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
2. Scroll down to the Alimony and Other Income section.
3. Press Ctrl + E in the Alimony received (Ctrl + E) field to expand it.
4. Enter the Alimony received and Date of agreement.
   • Lacerte will only report the alimony on the federal return if the date is before 12/31/2018. However, nonconforming states may still include this as income. If your client received reportable alimony from multiple pre-2019 agreements, Lacerte will print the agreement date for which the most alimony was received on Schedule 1.

How to report Other Income not entered elsewhere

1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
2. Scroll down to the Alimony and Other Income section.
3. Hold down Ctrl+E in Other income (Ctrl+E) (taxpayer code 11, spouse code 61).
   • Note: The left column is used for the Taxpayer and the right column is used for the Spouse.
4. Enter the Description and Amount.
5. Click OK.

This amount will flow to Form 1040, Schedule 1, along with the description.

How to report Cryptocurrency and NFTs

The IRS has added line 8v to Schedule 1 for reporting digital assets, like cryptocurrency or non-fungible tokens (NFTs), that were received as ordinary income and not reported elsewhere.

In most cases cryptocurrency or virtual currency is reported on the tax return in the same manner as property such as stock or other capital gains or losses. See Frequently Asked Questions on Virtual Currency and Digital Assets Transactions for the IRS guidelines.

To generate an amount on Schedule 1, line 8v:

1. Go to the Detail tab
2. Open Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
3. Go to the Alimony and Other Income section
4. Enter the necessary amount in the field: Digital assets received as ordinary income not reported elsewhere
   • This field is located at the end of the section

If you are reporting Digital Assets transactions, like cryptocurrency and NFTs, in the 1040 return, be sure to mark the Yes box on the "At any time during 2024, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)?" question.

How to report Jury Duty Pay

1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
2. Scroll down to the Alimony and Other Income section.
3. Enter the amount in Jury duty pay (taxpayer code 28, spouse code 59).
   • Note: The left column is used for the Taxpayer and the right column is used for the Spouse.

How to report Alaska Permanent Fund Dividends

1. Go to Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc.
2. Scroll down to the Alimony and Other Income section.
3. Enter the amount in Alaska permanent fund dividends (taxpayer code 21, spouse code 71).
   • Note: The left column is used for the Taxpayer and the right column is used for the Spouse.

How do I enter ordinary gains or losses for line 4?

Schedule 4, line 1, comes directly from Form 4797, line 18b. If your client disposed of depreciable property, review Form 4797, page 2 for accuracy. 

Form 4797, line 22, Depreciation allowed, is automatically calculated by Lacerte for all assets entered on Screen 22. If you need to override this line you must enter the disposition on Screen 17 instead. 

Refer to this article for instructions.

Why aren't Schedule E losses flowing to line 5?

Some or all K-1 losses may have been limited by the basis, at-risk, or passive rules. The easiest way to check where limitations occurred is by reviewing the K-1 Reconciliation Worksheets. From there, you can determine whether you need to review the Basis Worksheets, Form 6198 for at-risk limits, or Form 8582 for passive activity limits. 

Follow these steps to report NOL Carryover:

1. Go to Screen 15, Net Operating Loss Deduction.
2. Enter the Year of loss (e.g.,[prior year]) (MANDATORY) (code 18).
3. Enter the Initial loss (code 22).
4. Enter the AMT initial loss  (code 23) if applicable.
5. Enter the Carryover available in [current year] (taxpayer code 19, spouse code 69).
6. Enter the AMT carryover available in [current year] (taxpayer code 13, spouse code 63) if applicable.
   • Note: The left column is used for the Taxpayer and the right column is used for the Spouse.

How does Lacerte calculate NOLs for line 8a?

For tax year 2024 the IRS is working on creating Form 172 to show the calculation of Net Operating Losses for Individuals, Estates and Trusts. This form will replace current NOL Worksheets and Statements in the program once released. To see Draft instructions for the form see here. To see a Draft copy of the form see here.

Click the green See Stmt hyperlink next to this line to view the calculation of taxable income available for NOL utilization. Any NOL not absorbed this year will create a carryover.