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. When would I have to fill out a Schedule D IRS form?

    In general, taxpayers who have short-term capital gains, short-term capital losses, long-term capital gains or long-term ... Read Full Answer >>
  2. Who needs to fill out IRS Form Schedule B?

    Taxpayers who receive more than $1,500 in taxable interest and/or ordinary dividends during the year are required to fill ... Read Full Answer >>
  3. Who's required to fill out a Schedule C IRS form?

    Anyone who operates a business as a sole proprietor must fill out Schedule C when filing his or her annual tax return. IRS ... Read Full Answer >>
  4. When should my tax refund arrive?

    More than 90% of income-tax refunds arrive in less than three weeks, according to the Internal Revenue Service (IRS). However, ... Read Full Answer >>
  5. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ... Read Full Answer >>
  6. Are Flexible Spending Account (FSA) items tax deductible?

    Flexible Spending Accounts (FSAs) are employer-sponsored, tax-favored savings plans expressly for the future reimbursement ... Read Full Answer >>
Related Articles
  1. Investing News

    Obama Floats $10 a Barrel Oil Tax

    President Obama intends to propose a $10 a barrel tax on oil; consumers might have to cough up 25 cents more per gallon.
  2. Taxes

    Confused About Estimated Tax Deadlines for 2016?

    If you run a business or have investment income, pay attention to this year's estimated tax deadlines. Here are the details, and what's new for 2016.
  3. Retirement

    Retirement Plan Tax Prep Checklist

    Here's a list of items you need to have in order by tax time, including paying attention to those pesky required minimum distributions.
  4. Markets

    The (Expected) Market Impact of the 2016 Election

    With primary season upon us, investor attention is beginning to turn to the upcoming U.S. presidential election.
  5. Insurance

    Jan. 31 is Sunday: Almost No Time to Duck Obamacare Penalty

    If you don't have health insurance, act NOW or you could owe penalties on your 2016 taxes, in addition to this year's.
  6. Fundamental Analysis

    5 Economic Changes to Expect if a Republican Wins in 2016

    Discover the five most likely economic changes the United States can expect if a Republican wins the presidential election in 2016.
  7. Term

    How A Schedule K-1 Works

    Schedule K-1 is a U.S. tax document used to report income, losses and dividends.
  8. Term

    What Is Section 1231 Property?

    Section 1231 property is depreciable business property that’s held for a year or longer.
  9. Fundamental Analysis

    5 Economic Changes to Expect if a Democrat Wins in 2016

    Discover the potential economic effects of a Democratic White House win in 2016, including higher taxes for the wealthy and tighter banking regulations.
  10. Taxes

    The Purpose Of The W-9 Form

    Businesses use IRS form W-9 to gather information from vendors they hire as independent contractors.
RELATED TERMS
  1. Farm Income

    Farm income refers to profits and losses incurred through the ...
  2. Schedule D

    A U.S. income tax form used by taxpayers to report their realized ...
  3. Earnings Stripping

    Earnings Stripping is a commonly-used tactic by multinationals ...
  4. Skinny Down Distribution

    Skinny down distribution is corporate practice of slimming down ...
  5. Taxes

    An involuntary fee levied on corporations or individuals that ...
  6. Sales Tax

    A consumption tax imposed by the government on the sale of goods ...
Trading Center