Taxes From A To Z (2019): X Is For Schedule X

It’s my annual Taxes from A to Z series! This time, it’s Tax Cuts and Jobs Act (TCJA) style. If you’re wondering whether you can claim house office expenses or whether to deduct a capital loss under the new law, you won’t want to miss a single letter.

X is for Schedule X.

Fun fact: There is no Schedule X for individuals for federal income tax purposes. The form 1040 has six new numbered schedules (you can see those here) and twelve returning lettered schedules. The lettered schedules are:

Schedule A, Itemized Deductions
Schedule B, Interest and Ordinary Dividends
Schedule C, Profit or Loss from Business (Sole Proprietorship)
Schedule C-EZ, Net Profit from Business (Sole Proprietorship)
Schedule D, Capital Gains and Losses
Schedule E, Supplemental Income and Loss
Schedule EIC, Earned Income Credit
Schedule F, Profit or Loss From Farming
Schedule H, Household Employment Taxes
Schedule J, Income Averaging for Farmers and Fishermen
Schedule R, Credit for the Elderly or the Disabled
Schedule SE, Self-Employment Tax

But that doesn’t mean that there is no Schedule X on any individual income tax returns. Some states, including California, Hawaii, Massachusetts, Tennessee and Utah, have a Schedule X for state income tax purposes (some local tax authorities have them, too).

Taxpayers can get used to the idea that values on schedules transfer exactly from federal to state on the same schedules, but that’s not always the case. Notwithstanding that the rules can be different, the schedules may be, too. For example, in Pennsylvania, you report dividends on Schedule B for state purposes, just like on the federal return. And you report your business income on Schedule C for state purposes, just like on the federal return. But Schedule A? It’s not used for itemized deductions at all; it’s used for interest.

The bottom line? Pay attention to your returns, even if (maybe especially if) you are self-self-preparing with tax software. Double-check the interplay of your state and federal tax returns and make sure that you are reporting correctly on both.

For more Taxes From A To Z^TM 2019, check out the rest of the series: