Schedule 1-A: The Four OBBBA Deductions

About the course

The One Big Beautiful Bill Act created four new above-the-line deductions that first appear on 2025 individual returns via a new form — Schedule 1-A. You'll see them on almost every return this filing season: the tips deduction, the overtime deduction, the auto loan interest deduction, and the increased senior deduction. Each has its own eligibility rules, income phase-outs, substantiation requirements, and preparer exposure.

This course walks the form line by line. For each of the four deductions you'll get: who qualifies, what phase-out applies, what the client has to substantiate, what the employer has to report on the revised Forms W-2 and 1099, and where the preparer exposure sits when the numbers don't tie. The course then covers how Schedule 1-A interacts with the rest of the return — AGI, itemized versus standard deduction choice, credit phase-outs, and QBI computation.

Three hours of Federal Tax Update credit while OBBBA is new.

Learning objectives

By the end of this course, participants will be able to:

1. Identify the four deductions reported on Schedule 1-A and the OBBBA section that authorizes each.
2. Identify taxpayer eligibility rules for the tips, overtime, auto loan interest, and senior deductions, including phase-out thresholds.
3. Recognize the employer reporting requirements on revised Forms W-2 and 1099 that support each Schedule 1-A deduction.
4. Identify the effect of Schedule 1-A deductions on adjusted gross income, itemized versus standard deduction choice, credit phase-outs, and the qualified business income deduction.
5. Recognize the preparer due diligence obligations under Circular 230 §10.22 and preparer penalty exposure under IRC §6694 for Schedule 1-A positions.

Syllabus

1. SECTION 01Schedule 1-A on the return

   Where the form lives, how it flows to Form 1040, and why the four deductions are grouped together despite covering unrelated activities.

2. SECTION 02The tips deduction

   OBBBA eligibility rules, occupation limitations, W-2 reporting under the revised Form, phase-out mechanics, and preparer verification of tip income.

3. SECTION 03The overtime deduction

   Which overtime qualifies, employer reporting requirements, phase-out application, and how the deduction interacts with FLSA classification questions the preparer sees on the W-2.

4. SECTION 04The auto loan interest deduction

   Vehicle eligibility, loan documentation requirements, interest calculation, and the substantiation the client needs to keep.

5. SECTION 05The increased senior deduction

   Who qualifies as a senior for OBBBA purposes, the standard deduction interaction, and the phase-out at higher AGI.

6. SECTION 06Interaction with the rest of the return

   How Schedule 1-A above-the-line deductions affect AGI-driven items — itemized vs. standard choice, medical expense floor, credit phase-outs, QBI computation.

7. SECTION 07Preparer exposure

   §10.22 diligence, §6694 penalties, and documentation practices for Schedule 1-A positions that hold up under review.

Instructor

Jennifer Harris Smith, JD, CPA. Attorney (Texas). CPA (Texas). Member of Texas Bar College. Full bio →