How to File Schedule F on TurboTax

Filing a Schedule F for farm income can feel more complicated than a standard tax return, but with the right preparation and guidance, you can handle it accurately. This guide walks you through exactly how to prepare for and file your Schedule F, Profit or Loss From Farming, using TurboTax. We'll cover who needs to file, what documents to gather, and the specific steps to take within the software.

What is Schedule F (and Who Needs to File It)?

Schedule F is the IRS form used to report the income earned and expenses paid in the business of farming. If you cultivate, operate, or manage a farm for profit, either as an owner or a tenant, you likely need to file this form with your personal tax return (Form 1040). The IRS defines a "farm" broadly, including livestock, dairy, poultry, fish, fruit, and truck farms, as well as plantations, ranches, ranges, and orchards.

You must file Schedule F if you are an individual, fiduciary of an estate or trust, or a partner in a farming partnership. The key factor is that your farming activity must be run as a business with a clear profit motive. Mere hobby farming, where you farm for recreation or sport with no intention of making a profit, has different tax rules and its expenses are not deductible on Schedule F.

To determine if your farm is a business, the IRS looks at several factors, primarily whether you operate in a businesslike manner, dedicate significant time and effort to the activity, and have a history of making profits. If your farm loses money year after year without a clear plan to become profitable, the IRS might reclassify it as a hobby.

Gathering Your Farm Records Before You Start

Good preparation is the secret to a smooth filing process. Before you even open TurboTax, take the time to organize your income and expense records for the year. This prevents you from searching for misplaced receipts and ensures you don't miss any valuable deductions. Here's a checklist of what you'll need:

Farm Income Records

Collect all documents related to money your farm brought in. These can be sales receipts, bank deposit slips, and any tax forms you received.

• Sales of Livestock and Other Items Bought for Resale: Records of cattle, hogs, or poultry you bought and later sold.
• Sales of Livestock and Produce You Raised: Details on sales of crops, produce, grains, and livestock that were born and raised on your farm.
• Government Program Payments: Any statements or Form 1099-G for federal or state subsidies, conservation payments, or grants.
• Crop Insurance Proceeds: Form 1099-MISC or other statements detailing any payments you received from insurance claims.
• Custom Hire or Machine Work: Income you earned from renting out your equipment or performing services for other farmers.
• Other Income: This includes any miscellaneous farm income, like sales of gravel or soil, state gasoline tax refunds, or income from a coop.

Farm Expense Records

Organize your expense receipts and invoices into categories. This makes data entry in TurboTax much easier, as the software's categories largely mirror those on the official Schedule F.

• Car and Truck Expenses: Mileage logs, fuel receipts, and repair costs for vehicles used in your farm operations. You can choose between the standard mileage rate or actual expenses.
• Supplies & Inputs: Receipts for seeds, plants, chemicals, fertilizer, and lime.
• Feed Purchased: Documentation for all feed bought for your livestock.
• Labor Hired: Records of wages paid to employees (including family members), accompanied by Forms W-2 and W-3. Remember to exclude your own salary.
• Repairs and Maintenance: Costs for fixing farm machinery, equipment, and buildings (like barns or fences). Be careful not to include costs that are considered capital improvements.
• Taxes and Insurance: Property and real estate taxes on farmland, as well as premiums for business and crop insurance.
• Utilities: Bills for electricity, water, and other utilities used for farm operations. If a utility serves both your home and farm, you must properly allocate the business portion.

A Step-By-Step Guide to Filing Your Schedule F in TurboTax

Once your documents are organized, you're ready to start your tax return. To report farm income, you'll need to use TurboTax Self-Employed. Let's walk through the process.

Step 1: Navigate to the Farm Income Section

After you complete the personal information sections of your tax return, TurboTax will ask you about your income for the year. Look for the "Wages & Income" section. You'll see several categories. Select "Business items" or search for "Farm income." You'll eventually land on a screen that asks you to add your work. Choose "Farming activities."

Step 2: Set Up Your Farm Profile

TurboTax will guide you through a series of questions to create a profile for your farm. You will need to provide:

• Your farm's name and address (if different from your own).
• Your Employer Identification Number (EIN), if you have one. If you don't, you'll use your Social Security Number.
• The Principal Agricultural Activity Code that best describes your farm. TurboTax provides a searchable list; for example, "Oilseed and grain farming" is code 111100. Choose the one that accounts for the largest portion of your income.
• Your accounting method (Cash or Accrual). Most farms use the cash method, which means you report income when you actually receive it and deduct expenses when you actually pay them. Select the method you've used consistently.

Step 3: Enter Your Farm Income

With the profile complete, you'll move to the income section. TurboTax breaks this down into easy-to-understand categories. Simply take the records you gathered earlier and enter the totals into the corresponding fields.

For example, you'll see a section for "Farm Income." Click into it, and you'll find specific lines for:

• Sales of livestock and other items bought for resale.
• Sales of livestock and produce you raised.
• Income from cooperatives.
• Agricultural program payments (and a place to input 1099-G info).
• Crop insurance proceeds.
• Custom hire/machine work income.

Enter your totals in each relevant box. If you received tax forms like a 1099-MISC or 1099-G, the software will prompt you to enter that information directly.

Step 4: Enter Your Farm Expenses

Next comes your farm's expenses. Similar to the income section, TurboTax presents you with a list of common farm expense categories. It will ask about things like:

• General expenses (feed, seeds, fertilizer, supplies, vet fees).
• Vehicle Expenses (you'll be prompted to enter mileage or actual costs).
• Employees (wages, payroll taxes).
• Insurance, rent, and utilities.

Just go down the list and fill in your totals for each category based on your organized records.

TurboTax also has a dedicated section for "Assets/Depreciation." Here is where you will input any large purchases of property or equipment, like a new tractor, combine, or storage bins. Enter the asset description, cost, and the date you placed it in service. The software will then automatically calculate the depreciation deduction for you, asking questions to determine if you can take advantage of Section 179 or bonus depreciation to accelerate the write-off.

Step 5: Review Your Farm Summary

After you've input all your income and expenses, TurboTax will generate a summary of your farm's performance for the year. This screen shows your total farm income, total farm expenses, and the resulting net profit or loss. Carefully check these numbers against your own records to ensure everything was entered correctly. This net profit or loss is the figure that will be carried over to your Form 1040 and used to calculate your self-employment tax.

Important Considerations for Farm Filings

Filing a Schedule F involves a few extra layers of tax law that are important to understand. Here are some key points to keep in mind.

Depreciation is Your Friend

Don't neglect depreciation. The ability to deduct the cost of major assets over time is a significant tax benefit for farmers. Pay close attention to the asset section in TurboTax to make sure you claim depreciation on all eligible property. Special rules like Section 179 expensing and bonus depreciation can allow you to deduct the full cost of some assets in the year of purchase, providing a substantial tax break.

Don't Forget Self-Employment Tax

Your net farm profit from Schedule F is considered self-employment income. This means it is subject to Self-Employment Tax, which covers your contribution to Social Security and Medicare taxes. TurboTax will automatically calculate this for you on Schedule SE and add it to your overall tax liability. A positive aspect is that you get to deduct one-half of your self-employment tax payment on your Form 1040.

Estimated Tax Payments

Because you are self-employed, you are responsible for paying your taxes throughout the year—you don't have an employer withholding them for you. Most farmers must make estimated tax payments using Form 1040-ES. There are special rules that may allow qualifying farmers to make just one estimated payment by January 15th after the tax year ends or to skip estimated payments entirely if they file and pay their full tax liability by March 1st.

Final Thoughts

Filing Schedule F using TurboTax is a systematic process that becomes much simpler when you have all your financial records prepared in advance. By carefully gathering your documents and following the software prompts to enter your income, expenses, and asset purchases, you can construct an accurate picture of your farm's profitability and meet your tax obligations.

While software simplifies data entry, complex tax scenarios can arise. Questions about asset capitalization, multi-state filing obligations, or the nuances of hedging transactions require answers you can trust. For building a truly defensible position for clients, we use Feather AI to get quick, citation-backed answers from authoritative IRS guidance and tax code, ensuring our advice is always built on a solid foundation.