Schedule F Form Definition

What Is Schedule F: Profit or Loss from Farming?

If you are a farmer and your farming business is a sole proprietorship, you must submit Schedule F (entitled “Profit or Loss from Farming”) to report your agricultural business’s net profit or loss for the tax year.

Producers include livestock, dairy, poultry, fish, and fruit farmers, as well as owners/operators of plantations, ranches, ranges, nurseries, or orchards. Your agricultural profit or loss is then transferred to a form 1040, which is used to calculate your overall tax burden. Schedule F is the equivalent of Schedule C for farmers and other single owners.

Important Takeaways:

  • Schedule F of the Internal Revenue Service is used to record taxable income derived from farming or agricultural operations.
  • Regardless of the sort of agricultural income or whether it is a principal business activity or not, this schedule must be included on Form 1040 tax return.
  • Schedule F also includes a number of farm-related credits and deductions.

What Is the Purpose of Schedule F?

Schedule F inquires about your primary farming activity or crop, as well as your income from selling livestock, produce, grains, or other products, and whether you received farm income from cooperative distributions, agricultural program payments, Commodity Credit Corporation loans, crop insurance proceeds, federal crop disaster payments, or any other source. Depending on whether you utilize the cash or accrual approach, Schedule F gives multiple methods to account for your revenue.

The IRS website contains all previous versions of Schedule F.

Special Factors to Consider When Filing Schedule F

Farm Income

Farm income in the United States may be split as follows in terms of agricultural policy:

  • Gross Cash Income (GCI) is the total of all revenues from the sale of crops, animals, and farm-related products and services, as well as any direct government payments.
  • Gross Farm Income (GFI) the same as gross cash revenue, but with the inclusion of non-monetary income, such as the value of self-produced food consumed at home.
  • Net Cash Income (NCI) the total cash income minus all cash costs such as feed, seed, fertilizer, property taxes, loan interest, wagers, contract labor, and rent to non-operator landlords.
  • Net Farm Income (NFI) is defined as gross farm revenue minus cash and non-monetary expenditures such as capital consumption and farm household expenses.
  • Net Cash Income (NCI) is a short-term cash flow statistic.

Third-Party Payments

Schedule F also asks whether you received any payments during the tax year that required you to submit Form 1099, and if so, if you did. If you hired an independent contractor to undertake more than $600 in work for your farm company, such as carrying your produce to a weekly farmer’s market, you would need to submit Form 1099.

Other Resources to Consider When Filing Schedule F

For further information, IRS Publication 225, sometimes known as the Farmer’s Tax Guide, is a booklet that assists agribusiness owners in navigating the farming-specific tax law. The booklet describes and illustrates how the federal government taxes farmers. Individuals will be taxed if the farm is run for profit, regardless of whether the taxpayer owns the property or is a renter. IRS Publication 225 explains the many accounting techniques that farmers may use to operate their businesses and how farmers must report agricultural revenue.

Along with IRS Publication 225, the IRS produces IRS Publication 51, a publication tailored to farm employees’ employers. Publication 51 explains how people that hire personnel in the agricultural industry must comply with tax withholdings. The United States Department of Labor sometimes demands businesses to register with them and does not let companies designate farm laborers as independent contractors.

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