IRS Schedule F – Profit or Loss From Farming

Schedule F (Form 1040), Profit or Loss From Farming, reports income and deductible expenses from a farming business operated by an individual or other filer allowed by the instructions. It is organized around farm accounting rather than ordinary wage or investment income.

Farmers must identify their principal crop or activity, accounting method, employer identification number where applicable, and participation in the operation. Those facts affect income timing and loss limitations.

Download the current final Schedule F PDF from IRS.gov and consult the current IRS instructions. This page covers the 2025 revision for tax year 2025, verified 2026-08-10.

How the IRS classifies and files this form

Document type: farm profit or loss schedule attached to an individual return.

Schedule F is attached to Form 1040, 1040-SR, 1040-NR, 1041, or 1065 when the instructions permit. For an individual, the net result flows through Schedule 1; net earnings may also affect Schedule SE.

Farm income and accounting method

Part I reports sales of livestock and produce, cooperative distributions, agricultural program payments, Commodity Credit Corporation loan treatment, crop insurance proceeds, custom hire income, and other farm income. Cash-method and accrual-method taxpayers follow different timing and inventory rules.

Farm expenses

Part II classifies ordinary and necessary expenses such as chemicals, conservation, custom hire, depreciation, employee benefits, feed, fertilizer, freight, insurance, interest, labor, pension plans, rent, repairs, seeds, storage, supplies, taxes, utilities, and veterinary costs. Personal expenses and capital improvements are not current farm deductions simply because they were paid from a farm account.

Depreciation, livestock, and property sales

Purchased breeding or dairy livestock and equipment may be depreciable. Property dispositions may require Form 4797 rather than being netted into farm sales. Raised livestock held for sale and purchased livestock held for resale can receive different inventory or basis treatment.

Loss limitations and participation

A Schedule F loss can be limited by basis, at-risk, passive-activity, excess-business-loss, and not-for-profit rules. Material participation also affects whether the activity is passive. A negative bottom line does not by itself establish a deductible loss.

Connections to Schedule SE and Schedule J

Net farm earnings may enter Schedule SE for self-employment tax. Eligible taxpayers with uneven farming or fishing income may evaluate Schedule J income averaging, which changes the income-tax computation but does not rewrite prior-year returns.

Farm recordkeeping priorities

• Separate sales, program payments, insurance proceeds, and loans.
• Maintain depreciation schedules and purchase records for equipment and livestock.
• Document business use of vehicles, utilities, land, and mixed-use property.
• Track inventory where the accounting method requires it.
• Retain participation records when passive treatment could be disputed.

Cash and accrual reporting differences

A cash-method farmer generally reports income when actually or constructively received and deducts allowable expenses when paid, while an accrual-method farmer generally uses inventories and reports income when earned. Special rules for crop insurance proceeds, CCC loans, disaster payments, and prepaid farm supplies can modify those broad principles.

The method used should match prior returns unless a permitted change is made. Switching treatment only because one year’s result is favorable can create an unauthorized accounting-method change.

Employees, contractors, and information reporting

Farm labor costs can trigger payroll tax, Form W-2, and agricultural employer-return obligations. Custom hire payments are different from wages when the service provider operates an independent business, but classification depends on control and facts. Information-return rules may apply to contractor payments.

Schedule F’s labor line is therefore not the end of employment compliance. Maintain worker identities, dates, services, payment records, and the analysis supporting employee or contractor treatment.

Farm books to Schedule F

This cross-check identifies the records and calculations that should agree before Schedule F is filed. It is especially useful when several statements or supporting forms feed one line.

Resolve any Schedule F difference at the source rather than forcing it into the final total. Retain this reconciliation and the documents behind it with the tax records even when the worksheet itself is not submitted to the IRS.

Questions taxpayers commonly ask

Is every agricultural activity a Schedule F business?

No. The activity must meet the applicable trade-or-business rules; hobby and investment activities are treated differently.

Does a Schedule F profit create self-employment tax?

It commonly produces net earnings considered on Schedule SE, subject to the self-employment tax rules and exceptions.

Can a farmer use Schedule J after filing Schedule F?

Potentially. Schedule J is a separate election for eligible farming or fishing income and requires its own comparison calculation.

FederalFormGuide.com is an independent informational resource, not the IRS. This guide provides general information and does not replace the current IRS instructions or professional advice for a taxpayer’s facts.

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