Schedule F: Instructions, Who Files & Due Date

Who Files Schedule F

Schedule F, officially titled Profit or Loss From Farming, calculates the net profit or loss from regular farming operations. According to IRS Publication 225 (2025), you are in the business of farming if you cultivate, operate, or manage a farm for profit, either as an owner or a tenant. Qualifying operations include livestock, dairy, poultry, fish, fruit, and truck farms, as well as plantations, ranches, ranges, orchards, groves, and nurseries that grow ornamental plants.

Eligible filers include sole proprietors, sole members of a domestic single-member LLC (unless the LLC elected corporate treatment on Form 8832), partnerships, S corporations, LLCs taxed as partnerships, trusts, and estates. Regular C corporations do not use Schedule F and instead report farming income and loss on Form 1120.

If spouses jointly own and operate an unincorporated farm and share in the profits and losses, they can either file Form 1065 as a partnership or make a Qualified Joint Venture (QJV) election on a joint return. When both spouses materially participate as the only members of the farm, electing QJV status lets each spouse file a separate Schedule F and a separate Schedule SE to report their respective share of income and deductions. This gives both spouses Social Security and Medicare earnings credit without filing a partnership return. In community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), spouses who wholly own an unincorporated farm as community property can also treat the business as a sole proprietorship.

• Sole proprietors and single-member LLCs: Attach Schedule F to your individual return (1040, 1040-SR, 1040-SS, or 1040-NR), and carry Line 34 net profit or loss to Schedule 1, line 6, and Schedule SE, line 1a.
• Partnerships: Attach Schedule F to Form 1065 and enter Line 34 net profit or loss on Form 1065, line 5.
• Trusts and estates: Attach Schedule F to Form 1041 and enter Line 34 net profit or loss on Form 1041, line 6.

• IRS: Publication 225 (2025), Farmer's Tax Guide
• IRS: Instructions for Schedule F (Form 1040) (2025)

What Does Not Go on Schedule F

Not every rural or agricultural receipt belongs on Schedule F. Part IV of the form and the Farmer's Tax Guide draw clear boundaries between active farming and related activities.

• IRS: Publication 225 (2025), Farmer's Tax Guide
• IRS: Instructions for Schedule F (Form 1040) (2025)

Schedule F Due Date and Special Estimated Tax Rules for Farmers

Schedule F is filed together with your main annual federal income tax return (1040, 1040-SR, 1040-SS, 1040-NR, 1041, or 1065). If you had to make estimated tax payments for 2025 and underpaid them, you will not be charged an estimated tax penalty if you meet 2 conditions:

• Your gross farming or fishing income for 2024 or 2025 is at least two-thirds of your gross income.
• You file your 2025 tax return and pay all tax due by March 2, 2026.

• IRS: Instructions for Schedule F (Form 1040) (2025)
• IRS: Publication 225 (2025), Farmer's Tax Guide

What Records You Need to Complete Schedule F

Farmers must keep a summary of business transactions showing gross income, expenses, deductions, and credits, backed by original supporting documents. If you operate more than 1 separate business, you must maintain a complete and separate set of books and records for each business.

• Information returns received: Form 1099-PATR (cooperative distributions), Form 1099-G or Form CCC-1099-G (agricultural program payments, Conservation Reserve Program payments, and market gains), Form 1099-A (forfeited Commodity Credit Corporation loans), Form 1099-MISC (crop insurance proceeds, custom farming work, or prizes of $600 or more), Form 1099-K (payment card and third-party network transactions), and Form 1099-C (canceled debt of $600 or more).
• Proof of payment and expense receipts: Invoices, bills of sale, real estate closing statements, canceled checks, and legible bank or credit card statements showing the amount, payee name, and transaction or posting date. Proof of payment alone does not establish a deduction, so keep sales slips and invoices showing what was purchased.
• Business asset logs: Records showing when and how each farm asset was acquired (new or used), full purchase cost, cost of improvements, Section 179 and special depreciation allowances taken, casualty losses, business use percentage, and disposition price and expenses.
• Accrual inventory records (if required): Actual count or measurement of unsold livestock, harvested crops, and supplies at year-end, including quality and weight factors and your chosen valuation method (cost, lower of cost or market, farm-price method, or unit-livestock-price method).
• Retention timelines: Keep general tax records for at least 3 years from when your return was due or filed (or 2 years from the date the tax was paid, whichever is later). Keep employment tax records for at least 4 years after the tax becomes due or is paid. Keep property and asset basis records until the period of limitations expires for the tax year in which you dispose of the property in a taxable disposition.

• IRS: Publication 225 (2025), Farmer's Tax Guide
• IRS: Instructions for Schedule F (Form 1040) (2025)

How Schedule F Works: Header and Accounting Methods (Lines A to G)

On Line B, enter 1 of the 17 Principal Agricultural Activity Codes from Part IV on page 2 of the form. These six-digit codes are based on the North American Industry Classification System (NAICS) and identify the source of most of your farm income (for example, 111100 for oilseed and grain farming, 112111 for beef cattle ranching and farming, or 112120 for dairy cattle and milk production).

On Line C, check either Cash or Accrual. Cash-method filers report income in the year actually or constructively received and deduct expenses in the year paid, completing Parts I and II. Constructive receipt happens when money is credited to your account or made available without restriction, meaning you cannot hold a grain check received in December until January to delay tax. Accrual-method filers report income when earned and deduct expenses when economic performance occurs, completing Part II, Part III, and Line 9 of Part I. For tax years beginning in 2025, a small business taxpayer (1 with average annual gross receipts of $31 million or less for the 3 prior tax years that is not a tax shelter or farming syndicate) is exempt from mandatory accrual accounting, Section 263A uniform capitalization rules, and keeping formal inventories.

On Line E, check whether you materially participated in the operation of the farm during 2025. Retired or disabled farmers are treated as materially participating if they materially participated in 5 or more of the 8 years before retirement or disability. If you check No on Line E and have a farm loss, you must use Form 8582 to limit passive activity losses. On Lines F and G, disclose whether you made payments in 2025 requiring you to file Forms 1099 (generally required when paying at least $600 in rents, services, prizes, or nonemployee compensation on Form 1099-MISC or Form 1099-NEC).

• IRS: Instructions for Schedule F (Form 1040) (2025)
• IRS: Publication 225 (2025), Farmer's Tax Guide

Part I and Part III: Reporting Farm Income (Lines 1 to 9 and 37 to 50)

Cash-method farmers report gross farm income on Lines 1 through 9 of Part I, while accrual-method farmers calculate gross farm income in Part III (Lines 37 through 50) by factoring in beginning and ending inventory.

• Lines 1a to 1c (Purchased livestock and resale items): Report gross sales of livestock or other items bought for resale on Line 1a, and subtract their original cost or basis on Line 1b. You deduct the purchase cost of resale livestock in the tax year the animals are sold, not the year you buy them (except for certain baby chicks or hens if you choose to deduct them when paid consistently). Do not include freight paid to acquire resale livestock on Line 18. Add those transportation costs to your cost basis on Line 1b.
• Line 2 (Raised products): Report total sales of livestock, produce, grains, and other products you raised. Because you deduct the expenses of raising these items as you pay them in Part II, your tax basis in raised products is zero.
• Lines 3a and 3b (Cooperative distributions): Enter total distributions from Form 1099-PATR on Line 3a, including cash patronage dividends, qualified written notices of allocation, and per-unit retain allocations. Exclude from taxable income on Line 3b any patronage dividends received from buying personal items, capital assets, or depreciable property (instead, reduce the cost basis of those assets).
• Lines 4a and 4b (Agricultural program payments): Report government payments (such as price loss coverage, agriculture risk coverage, Conservation Reserve Program annual payments, cost-share payments, and materials or services provided by the USDA) on Line 4a, and enter the taxable portion on Line 4b.
• Lines 5a to 5c (Commodity Credit Corporation loans): Normally, CCC loans are not income. However, you can elect to treat CCC loan proceeds as income in the year received on Line 5a and attach a loan statement to your return. Report forfeited CCC loans (shown on Form 1099-A) on Line 5b and the taxable portion on Line 5c.
• Lines 6a to 6d (Crop insurance and disaster payments): Report crop insurance and federal crop disaster payments received in 2025 on Line 6a. If 2025 was the year of physical crop damage and you use the cash method, you can elect to defer reporting the proceeds until 2026 if your normal business practice would have been to include more than 50% of the crop income in a following year. Check box 6c and attach an election statement under Section 451(f). Cash-method farmers forced to sell extra livestock due to drought, flood, or weather in an area eligible for federal aid can similarly elect under Section 451(g) to postpone reporting the gain from the additional animals until the year after the year of sale.
• Lines 7 and 8 (Custom hire and other income): Report incidental custom machine work on Line 7. On Line 8, report bartering income, breeding fees, state fuel tax refunds, federal fuel tax credits claimed on your 2024 Schedule 3, prizes won on farm livestock, and gains or losses from true commodity futures hedges.

• IRS: Publication 225 (2025), Farmer's Tax Guide
• IRS: Instructions for Schedule F (Form 1040) (2025)

Part II: Farm Expenses and 2025 Deduction Limits (Lines 10 to 36)

Part II covers the ordinary and necessary costs of operating your farm for profit, used by both cash and accrual filers. If an expense is partly personal and partly for farm business, you must make a reasonable allocation and deduct only the business share.

• Line 10 (Car and truck expenses): Deduct actual business vehicle expenses or use the 2025 standard mileage rate of 70 cents per mile plus business parking fees and tolls. You cannot use the standard mileage rate if you operate 5 or more vehicles simultaneously in a fleet. Under either method, you must complete Part V of Form 4562 and attach Form 4562 to your return.
• Line 12 (Conservation expenses): Deduct expenses paid to conserve soil and water, prevent erosion, or support endangered species recovery (such as leveling, terracing, windbreaks, brush eradication, and earthen dams) if consistent with an NRCS-approved or state-approved conservation plan. Do not deduct costs to drain or fill wetlands or prepare land for center pivot irrigation. Your deduction on Line 12 cannot exceed 25% of your gross income from farming, with any excess carried forward.
• Line 14 (Depreciation and Section 179): For tax years beginning in 2025, the maximum Section 179 expense deduction is $2,500,000, phasing out dollar-for-dollar once qualifying property placed in service exceeds $4,000,000 (the SUV cap is $31,300). Qualifying farm property includes machinery, equipment, grain bins, and single-purpose agricultural or horticultural structures. The 100% special depreciation allowance (bonus depreciation) is restored for qualified property acquired and placed in service after January 19, 2025, as well as for specified fruit and nut plants planted or grafted after January 19, 2025 (a 40% allowance applies to specified plants planted or grafted after 2024 and before January 20, 2025).
• Line 16 and the 50% Prepaid Farm Supplies Rule: Cash-method farmers can deduct prepaid farm supplies (unconsumed feed, seed, fertilizer, and certain poultry costs) in the year paid only up to 50% of their other deductible farm expenses for the year, unless they qualify for the farm-related taxpayer exceptions. Prepaid livestock feed is deductible when paid only if it is an actual purchase (not a refundable deposit), has a business purpose, and does not materially distort income.
• Lines 21a and 21b (Interest): Report farm mortgage interest paid to financial institutions (Form 1098) on Line 21a and other business interest on Line 21b. Small business taxpayers ($31 million or less in 3-year average gross receipts) are exempt from the Section 163(j) business interest limitation and do not file Form 8990.
• Line 22 (Labor hired): Deduct wages paid for farm labor, plus the cost of boarding farm laborers, reduced by any employment credits claimed. Reasonable wages paid to your child for doing farmwork under a true employer-employee relationship are deductible, and wages paid to minor children become subject to Social Security and Medicare taxes in the month the dependent child turns 18.
• Line 32 (Other expenses): Includes business startup costs (up to $5,000 if total startup costs are $50,000 or less, with the remainder amortized over 180 months), reforestation expenses (up to $10,000 per qualified timber property, or $5,000 if married filing separately, with the rest amortized over 84 months), 50% of business meals, farm accounting and tax preparation fees, and business use of your home.
• Lines 34 and 36 (Net profit or loss and loss limits): If Line 33 expenses exceed Line 9 gross income, check box 36a (all investment is at risk) or box 36b (some investment is not at risk, requiring Form 6198). Allowable losses must pass the at-risk rules (Form 6198), passive activity rules (Form 8582), and the 2025 excess business loss limitation on Form 461 ($313,000, or $626,000 for a joint return). A net operating loss (NOL) attributable to farming can be carried back 2 years using Form 172, unless you elect to waive the carryback.

• IRS: Publication 225 (2025), Farmer's Tax Guide
• IRS: Instructions for Schedule F (Form 1040) (2025)

Worked Example: Calculating Schedule F Net Profit and the 50% Prepaid Supplies Limit

Here is a step-by-step calculation written by our team for a cash-method grain and cattle farmer (assuming no farm-related taxpayer exception applies to the prepaid supplies).

• IRS: Instructions for Schedule F (Form 1040) (2025)

Common Schedule F Filing Errors to Avoid

The IRS highlights several recurring errors that can delay return processing or disallow deductions. Use this checklist to review your form before filing:

• Putting the wrong number on Line D (EIN): Never enter your Social Security Number (SSN), a payer's EIN from a 1099, or a disregarded single-member LLC's EIN on Line D. Enter only an EIN issued to you in your own name as sole proprietor, or leave Line D blank.
• Deducting the value of raised livestock that died: You cannot deduct the value of raised animals that died because the costs of raising them were already deducted as operating expenses. Also do not deduct personal living expenses, crops or livestock consumed by your family, or inventory losses.
• Deducting your own health insurance or retirement on Schedule F: Self-employed farmers cannot deduct their own health insurance premiums or retirement plan contributions on Lines 15 or 23. Report self-employed health insurance on Schedule 1, line 17, and self-employed retirement contributions on Schedule 1, line 16.
• Using Form 8829 for business use of a home: Farmers claiming a home office deduction on Schedule F, Line 32 must use the worksheets in IRS Publication 587 and must not use Form 8829.
• Deducting the 1st residential phone line: On Line 30 (Utilities), you cannot deduct the base rate and taxes of the 1st telephone line into your home. You can only deduct business charges above the base rate, or the business percentage of a 2nd phone line.
• Double-claiming personal vehicle loan interest: If you deduct personal-use car loan interest on Schedule 1-A for 2025, do not deduct that same personal interest portion on Schedule F.
• Forgetting to attach Form 4562 or Form 6198: Claiming car or truck expenses on Line 10 requires completing Part V of Form 4562 and attaching Form 4562. Checking box 36b for investments not at risk without attaching Form 6198 can delay processing of your tax return.

• IRS: Instructions for Schedule F (Form 1040) (2025)
• IRS: Publication 225 (2025), Farmer's Tax Guide

Flat-Price Farm and Business Tax Filing

Aldro is the cheapest way to get your business taxes done: $399 flat, with bookkeeping at $20 a month. The flat price covers everything tax for the year (every federal and state or provincial business return: Schedule C, 1065, 1120-S, 1120 and state returns, T2 and T1 with T2125 in Canada) and the owner's personal return when the business income needs it.

• IRS: Instructions for Schedule F (Form 1040) (2025)
• IRS: Publication 225 (2025), Farmer's Tax Guide