Farm Income
Payments from USDA programs like disaster or conservation subsidies go on this line.
What is Line 4 (Agricultural program payments)?
These everyday costs (like feed, fertilizer, and seed) reduce your taxable farm income when reported properly.
What are ordinary and necessary farm expenses?
This IRS form must be completed to claim depreciation for farm equipment, vehicles, and buildings.
What is Form 4562 (Depreciation and Amortization)?
If you sell farm equipment or livestock used for breeding, dairy, or draft, the sale is reported here; not directly on Schedule F.
What is Form 4797 (Sales of Business Property)?
This law, passed in March 2020, provided COVID-19 relief payments and expanded certain agricultural aid programs.
What is the CARES Act (Coronavirus Aid, Relief, and Economic Security Act)?
This line on Schedule F reports the total proceeds from selling livestock and produce you raised on a farm.
What is Line 1a (Sales of livestock, produce, grains, and other products you raised)?
You can deduct this expense for wages paid to hired laborers helping with planting or harvesting.
What is Line 22 (Labor hired [less employment credits])?
This special deduction allows you to expense certain property immediately, instead of depreciating it over time.
What is Section 179 expensing?
Farmers who need to calculate self-employment tax on their net farm income use this form.
What is Schedule SE (Self-Employment Tax)?
This credit allowed employers, including farm owners, to claim a refundable tax credit for keeping workers on payroll during the pandemic.
What is the Employee Retention Credit?
If you received money from a cooperative for cr ops or livestock sold through it, you report it here.
What is Line 3a (Cooperative distributions)?
The cost of maintaining and fueling tractors, combines, and trucks used for farm work is reported here.
What is Line 12 (Gasoline, fuel, and oil)?
When you sell a depreciated asset for more than its adjusted basis, the IRS calls it this.
What is depreciation recapture?
If you received conservation program payments or disaster relief that may be taxable, you’ll also report those on this form.
What is Form 1099-G (Certain Government Payments)?
Under 2020 relief measures, these loans were designed to help small businesses; including farms - cover payroll and essential expenses.
What are Paycheck Protection Program (PPP) loans?
When you total all farm income sources to find your gross income, you enter it here.
What is Line 9 (Gross income)?
These insurance costs (covering things like buildings, equipment, or liability) can be deducted on Schedule F.
What is Line 15 (Insurance [(other than health])?
The system used by the IRS to determine recovery periods and depreciation methods for farm assets.
What is MACRS (Modified Accelerated Cost Recovery System)?
When you need to reconcile estimated tax payments or withholding with your total tax due, this is the main return that ties everything together.
What is Form 1040 (U.S. Individual Income Tax Return)?
Farmers who received a forgiven PPP loan didn’t have to include that amount in income, thanks to this IRS clarification.
What is IRS Revenue Ruling 2021-02?
If you received income from custom hire work (like plowing, harvesting, or hauling for another farmer) you’d report it here.
What is Line 7 (Custom hire [machine work])?
When you pay interest on loans used to operate your farm, you can deduct it in this section.
What is Part II - Expenses (Line 21 – Interest [mortgage and other])?
For tax purposes, farm buildings generally have a recovery period of this many years.
What is 20 years?
If you raise and sell crops or livestock cooperatively, income reported on this form’s Schedule K-1 must be carried to Schedule F.
What is Form 1065 (U.S. Return of Partnership Income)?
In 2020, the deduction limit for Section 179 expensing increased to this amount, allowing larger immediate write-offs for equipment.
What is $1,040,000?