What Is a Schedule 3 Tax Form for Your Form 1040?

IRS Form 1040, Schedule 3 is an additional form that taxpayers may need to attach to their U.S. Individual Income Tax Return. It provides a designated space for reporting specific tax credits and payments that do not appear on the main Form 1040. The IRS created this schedule to streamline the primary tax form by moving less common items to separate schedules.

Schedule 3 organizes these items into two parts. Part I is for nonrefundable credits, which can reduce a taxpayer’s liability to zero but do not result in a refund beyond that. Part II accounts for other payments and certain refundable credits, which can lead to a refund even if no tax is owed.

Who Must File Schedule 3

You must file Schedule 3 if you are eligible to claim any of the tax credits or need to report any of the payments listed on the form. This includes several widely used credits, such as those for child and dependent care expenses and education credits. For instance, paying for qualifying educational expenses or making home improvements that qualify for an energy credit necessitates the use of this schedule. The completed form must be attached to your Form 1040, 1040-SR, or 1040-NR.

Credits and Payments Reported on Schedule 3

Part I – Nonrefundable Credits

This part of the form consolidates various nonrefundable credits. Line 1 is for the Foreign Tax Credit, which may require attaching Form 1116. This credit provides relief from double taxation for individuals who have paid income taxes to a foreign country.

Line 2 is for the Credit for Child and Dependent Care Expenses, calculated on Form 2441. Education credits, calculated on Form 8863, are entered on line 3 and encompass the American Opportunity Tax Credit and the Lifetime Learning Credit. The Retirement Savings Contributions Credit (Form 8880) is on line 4, and line 5 is for residential clean energy credits from Form 5695.

Line 6 is a catch-all for several other nonrefundable credits, each with its own corresponding form, including:

• The General Business Credit (Form 3800)
• The Credit for Prior Year Minimum Tax (Form 8801)
• The Adoption Credit (Form 8839)
• The Clean Vehicle Credit (Form 8936)
• The Credit for Previously Owned Clean Vehicles (Form 8936)

Part II – Other Payments and Refundable Credits

Part II of Schedule 3 is where taxpayers report certain tax payments and a few specific refundable credits. Line 9 reports the net premium tax credit for those who obtained health insurance through the Health Insurance Marketplace and are reconciling the advance payments they received. This calculation is performed on Form 8962.

Line 10 is used to report the amount paid with a request for an extension to file, which ensures that any payments made with the extension request are properly credited. If a taxpayer overpaid Social Security tax, often due to having more than one employer, the excess amount is reported on line 11.

Line 12 is for the Credit for Federal Tax on Fuels, claimed using Form 4136, for individuals who paid federal excise tax on fuel used for certain nontaxable purposes. Line 13 allows for claiming a credit from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, or a refundable clean vehicle credit.

Completing and Filing with Form 1040

The process of completing Schedule 3 begins with gathering and filling out all the other required IRS forms. For nearly every line item on Schedule 3, there is a corresponding form, such as Form 2441 for child care expenses or Form 8863 for education credits. These forms contain detailed instructions to guide the calculations, and you must complete them first to determine the dollar amount of each credit or payment.

Once the individual amounts have been determined, transfer these figures to the correct lines on Schedule 3. After all applicable lines are filled in, you will sum the amounts in each part. The total of all nonrefundable credits from lines 1 through 6 is entered on line 8, and the total of other payments and credits from lines 9 through 13 is entered on line 15.

These two totals are then carried over to your main Form 1040. The total from Schedule 3, line 8, is entered on Form 1040, line 20, while the total from line 15 is entered on Form 1040, line 31. When filing a paper return, the completed Schedule 3 must be attached behind Form 1040; for electronic filers, tax software automatically includes the schedule with your submission.