A:

If you are a farmer and your farming business is a sole proprietorship, you must file Schedule F to report your business’s net profit or loss for the tax year. Livestock, dairy, poultry, fish and fruit farmers as well as owner/operators of plantations, ranches, ranges, nurseries or orchards are considered farmers for the purposes of Schedule F. Your farming profit or loss is transferred to form 1040 for computing your total tax liability. Schedule F is to farmers what Schedule C is to other sole proprietors.

Schedule F asks about your principal farming activity or crop; 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 sources. Schedule F provides different ways to account for your income depending on whether you use the cash or accrual method. You’ll also need to fill out Schedule F in order to claim tax deductions for you farming business, which will lower your tax bill. Deductions you may be able to claim include but are not limited to the expenses you paid for a business vehicle, chemicals, conservation, custom hire, depreciation, employee benefits, feed, fertilizers, freight and trucking, gasoline and other fuel, insurance, interest, hired labor, pension and profit-sharing plans, repairs and maintenance, seeds and plants, storage and warehousing, supplies, taxes, utilities, veterinary fees and rent or lease fees for vehicles, machinery, equipment, land and the like.

Schedule F also asks if you made any payments during the tax year that required you to file form 1099 and if you have filed it. An example of a case where you would need to file a 1099 is if you hired an independent contractor to perform more than $600 worth of work, such as transporting your produce to a weekly farmer’s market, for your farm business.

RELATED FAQS
  1. Does the max contribution to a Roth IRA apply to the gross Schedule C income?

    I am receiving a pension and Social Security, but I have just accepted a position for which I must report the income on Schedule ... Read Answer >>
  2. What is the difference between federal and state withholding tax?

    Discover whether you can file your taxes by yourself. The three main options for tax preparation are a tax professional, ... Read Answer >>
  3. How Long Should I Keep My Tax Records?

    Having the right information available when the IRS calls can save you considerable time, money and stress. Learn how long ... Read Answer >>
  4. Do we have to file taxes?

    Our only income is social security and a very small pension amount. We were told by our accountant that we did not need to ... Read Answer >>
  5. How can I make sure I'm ready to file my taxes?

    Whether you file your return yourself, or have it done by a tax professional, you want to make sure you include all your ... Read Answer >>
  6. What are the key points when getting ready to file for unemployment aid?

    Before filing for unemployment aid, you must be unemployed, have worked in the past, lost the job through no your fault of ... Read Answer >>
Related Articles
  1. Investing

    Three Agriculture Startups Disrupting Monsanto

    Even as technology startups have disrupted other industries, agriculture has remained immune to its effect. But that is about to change.
  2. Savings

    Why Organic Food Is So Expensive

    Discover how organic farmers face many obstacles. Learn why your organics cost so much more than conventional foods and if there is any hope for falling prices.
  3. Taxes

    Should You File An Early Tax Return?

    When it comes to filing your taxes, it can often pay to wait until the deadline.
  4. Taxes

    Simple Last-Minute Tax Tips

    A little preparation and organization can take the stress out of last-minute tax filing.
  5. Taxes

    Filing Your First Tax Return

    Tax time can be intimidating - but knowing these tips can ease the process and get you a hefty return.
  6. Taxes

    Late with Your Taxes? Grab IRS Form 4868

    Fill out this form to get a few more months to file your tax return. But remember, April 15 is still the payment due date if you owe taxes.
  7. Taxes

    3 Common Tax Questions Answered

    We clarify some rules that often puzzle taxpayers.
  8. Taxes

    10 Important Year-End Tax Tips

    These tips will reduce your anxiety and can lower your 2009 tax bill.
  9. Taxes

    5 Rules To Follow If You Are Filing Taxes Yourself In 2013

    It is important to make sure that you cover all the bases when you decide to file without the financial expertise of a tax professional.
  10. Taxes

    How & Where to File Form 1040 (And Which Version)

    All taxpayers need to know three things when filing a 1040: which form to use, how to file and where to file. After reading this, you'll know all three.
RELATED TERMS
  1. Investment Farm

    An agricultural business operation that is purchased and operated ...
  2. Farm Income

    Farm income refers to profits and losses incurred through the ...
  3. Tax Schedule

    A rate sheet used by individual taxpayers to determine their ...
  4. Banks For Cooperatives

    Established by the Farm Credit Act of 1933, these regional, privately-owned ...
  5. Production Credit Association - PCA

    A federal instrumentality created by Congress through the Farm ...
  6. Crop-Hail Insurance

    A type of insurance that insures against crop damage caused by ...
Trading Center