Farm Tax Filing: What is Form Schedule F? (2024)

Tax season can be daunting for farmers and ranchers. After a long day out in the field, filing taxes just doesn’t sound appealing. But if you’re equipped with knowledge, the tax filing process could be quicker and you might even save your operation some money. So, let’s dig in and see if a Schedule F form is right for you and how to file one.

What Is Schedule F?

The IRS form Schedule F is a form that any sole proprietorship / single-member LLC farming business must complete when filing your federal taxes.

It is titled as “profit or loss from farming,” and it does exactly that - it helps you report your profit and loss from farming when you file your income taxes. The information that you input into Schedule F funnels into Form 1040 to help assess your total income tax liability.

As a taxpayer, it can get confusing keeping all of the different tax forms straight, so here’s a quick guide:

• Schedule F: Profit and loss from farming, required of sole proprietor farmers. The Schedule F form is essentially a special type of Schedule C form for farmers that allows you to report your farm income and expenses.
• Schedule C: This form is “profit and loss from business,” and it’s required for sole proprietor and single-member LLC businesses to complete this form if they make any income from self-employment activities. You can think of the Schedule F form (above) as a special type of Schedule C form for sole proprietor farmers. Unless you get income from non-farming self-employment activities, you’ll only need to file a Schedule F.
• Form 1040: US Individual Tax Return form - this is the form that the information from Schedule F gets funneled into to assess your total tax liability as a sole proprietor farmer. Sole proprietors, unlike other types of business entities (C-corps, LLCs, S-corps, etc.), are considered individuals when it comes to taxes.
• Form 4835: Farm Rental Income and Expenses: This is an IRS form that allows landowners to report out on rental income they receive from renting their land out to other farmers. This form is only used to report income and expenses on land that you rent to other farmers, not that you farm yourself.

To file a Schedule F form, you’ll need information about:

• Sales of livestock, crops and other farm-related goods or services
• Equipment expenses and depreciation
• Conservation expenses
• Insurance and tax expenses
• Rent or lease for vehicles, land, etc.
• Labor and employment expenses
• Input, seed, fuel, crop insurance and other common farm operating expenses

Tracking all of the above can be somewhat overwhelming, which is why we recommend a proactive budgeting and expense tracking approach. FarmRaise Tracks can help you stay up-to-date with your expense tracking, even while offline in the field. The app will export reports of your expenses for your tax preparer come tax time.

Schedule F Tax Write Offs for Farmers

When you complete Schedule F, you’ll have the opportunity to deduct certain farm expenses from your overall tax burden. Most farm expenses are helpful in this deduction calculation - so you’ll want to keep good records so that you can maximize your refund.

For example, if you log your expenses throughout the year on conservation activities, you might be able to deduct these expenses from your overall tax liability. To do this, you will need to prove that your conservation projects were approved by the NRCS or a comparable state conservation agency.

Expenses that are considered depreciable (equipment) or that qualify as ordinary business expenses (seed, inputs, etc.) would not be considered conservation expenses, even if they were used for a conservation practice. Instead, to take advantage of the conservation deduction category, you’ll want to report the cost of constructing windbreaks, irrigation ditches or terraces, or the cost of eradicating brush.

For farmers who receive conservation cost-share from the USDA through EQIP or CSP, you’ll want to report this income in a really specific way so that you can get the biggest benefit.

You can be creative with how you deduct certain farm expenses. For car and truck expenses, you have the option to either report out your vehicle’s actual cost of use, or the standard mileage that you had throughout the year for business purposes. For the former method - actual cost of use - you’ll want to keep accurate records of costs like fuel, repairs, oil, licensing and depreciation. Don’t yet have a good system to keep these records? Sign up for Tracks which was designed exactly for that purpose!

Asset depreciation is also something to consider for tax deduction. And, for farmers who grow crops on trees and vines, you can deduct 100% of the cost of the plant in the first year that you plant it.

You can also deduct:

• Interest paid on farm loans
• Rent or lease payments
• Repairs and maintenance
• Real estate and personal property taxes
• Seeds and plants
• Fertilizer and lime

See more specifics about deductions here.

How To Track Expenses for Tax Season

While you might be inclined to just throw all your receipts into a shoebox and forget about them until tax time, we recommend a more proactive and organized approach to tracking your expenses.

With FarmRaise Tracks - a mobile app for farmers - you can easily track your expenses in real-time so that you don’t have a headache later on. Tracks allows you to snap and upload pictures of receipts for every transaction, linking these to farm tax categories that you'll need for your Schedule F. In the app, you can track your farm expenses by farm product or crop, split expenses in seconds, and know your expenses for every major farm project.

Then, come tax time, you can export a csv report of all of your categorized expenses and send it straight to your tax preparer.

Be ready for the IRSand be more competitive for grant funding by tracking farm expenses today. Sign up for FarmRaise Tracks to get started!

When and How Farmers and Ranchers File a Schedule F

Typically, there are two opportunities to pay your taxes and file your Schedule F.

If you follow a normal calendar year schedule, the first opportunity is in mid-January. For 2023, this deadline was January 17, 2023. Alternatively, you can file your Schedule F alongside or Form 1040 by March 1, 2023, as long as you are able to pay the full tax amount due at that time.

If you don’t follow a typical calendar year for your business, then you will need to file your Schedule F and pay the associated taxes by:

• The 15th of the month following the end of your business fiscal year
• The 1st day of the third month following the end of your business fiscal year

The form must be submitted, with your payment, to the IRS by the above deadline.

Additional Tax Resources for Producers

• Our Ultimate Farmer’s Tax Guide (coming soon)
• FarmRaise Tracks
• Forms and Publications to Assist Farmers

While FarmRaise is dedicated to your farm’s financial health, it’s best to consult a CPA - certified public accountant - or financial professional when seeking financial or legal advice. The intention of this post is to offer you tips that could lead to farm prosperity but is not a substitute for professional advice.