Schedule F Tax Tips for Farmers

The tax code loves farmers, and it's no surprise that there are a variety of tax forms, deductions, and tax strategies to assist independent farmers and fishermen. The best tax resources for farmers include Forms and Publications to Assist Farmers from the IRS web site. The IRS has plenty of other resources to help self-employed farmers prepare their tax returns. We'll list all those resources at the end.

The Schedule F is for self-employed farmers. (Similarly, self-employed contractors file a Schedule C.) If your farm is organized as a corporation, partnership, or other form of incorporation, you will need to file the appropriate business tax return. Just like their Schedule C counterparts, farmers must keep good records, report income and expenses, and pay regular income tax and Self-Employment tax on their net profits from farming.

Farmers, however, face unique problems. There are good resources for helping farmers get up to speed with all the tax rules around owning and operating a farm, and the following web sites should be at the top of your reading list.

IRS Resources for Farmers:

• Farmer's Tax Guide - IRS Publication 225
• Tax Tips and Information for Farmers
• Forms and Publications to Assist Farmers
• IRS Audit Guidelines for Farms - contains excellent insight into the issues and questions IRS auditors take into consideration when auditing a farmer's tax return

Other Web Reources for Farmers:

• Overview of Schedule F - from the CCH Financial Planning Toolkit
• Farm Income Taxation - brief introduction to various types of income and deductions for farmers from Texas A&M University
• Farming and Federal Taxes - USDA report on the impact of taxes on farmers, with amazing statistics on the profitability of independently-owned farms