How to report income for Farming - Schedule F

Use Schedule F to report income or loss from farming. If you want to prepare it yourself, you can use our online tax preparation software to complete and efile your farming income on Schedule F. Efile is only available for current year tax return. Schedule F is broken into four parts. Your accounting method will determine which sections you will need to fill out.

First enter basic information about the farm, such as name of proprietor, principal product and accounting method Cash or Accrual.

Part I: Farm Income Cash Method

In the cash accounting method, income is constructively received when it is credited to your account or set aside for your use.

Report in Part I sales of livestock and other items purchased for resale and the cost of these items. Also report the sale of livestock, produce, grains, and other products you raised.

If you received distributions from a cooperative, you should receive a Form 1099-PATR. Report this income in Part I.

Also include in Part I:

• Direct payments

• Counter-cyclical payments

• Price support payments

• Market gain from the repayment of a secured Commodity Credit Corporation (CCC) loan for less than the original amount

• Diversion payments

• Cost-share payments (sight drafts)

• Payments in the form of materials or services

• CCC loans reported under election, as well as CCC loans forfeited

• Crop insurance proceeds and federal crop disaster payments

• Custom hire income

• Any other income

Part II: Farm Expenses Cash and Accrual Method

Do not include in expenses:

• Personal or living expenses such as taxes, insurance, or repairs on your home

• Expenses of raising anything your family used

• The value of animals you raised that died

• Inventory losses

• Personal losses

If you were repaid for any part of the expense, you must subtract the amount you were repaid from the deduction.

Part III: Farm Income Accrual Method

If you use the accrual method, report farm income when you earn it, not when you receive it. Generally, you must include animals and crops in your inventory if you use this method.

Part IV: Principal Agricultural Activity Codes

These codes for the Principal Agricultural Activity classify farms by their primary activity to facilitate the administration of the IRS. Select the code that best identifies your primary farming activity.