Schedule F (Form 1040) 2016: Profit or Loss From Farming

IRS Schedule F (Form 1040) is the federal form used by sole proprietor farmers to report profit or loss from farming for the tax year 2016. Farmers attach it to Form 1040 to report farm income, deductions, and self-employment tax obligations to the Internal Revenue Service.

Late Filers

Farmers who missed the April 2017 deadline can still file Schedule F to stop the failure-to-file penalty and establish a compliance record with the IRS.

Multiple Income Sources

Schedule F accommodates cash and accrual method filers reporting livestock sales, crop insurance proceeds, CRP payments, and agricultural program payments on a single return.

Itemizing Deductions

Farmers whose allowable farm expenses exceed gross income can itemize deductions, including car expenses, chemicals, feed, fertilizers, labor hired, and conservation expenses on Part II.

Claiming 2016 Credits

Eligible farmers may claim the federal fuel tax credit for gasoline used in farming, reported as other income on line 8 of Schedule F.

IRS Compliance

Filing Schedule F establishes a compliance record that the IRS may require before approving a payment plan or resolving any outstanding 2016 tax balance.

Citizens Abroad / Military

U.S. farmers abroad or military personnel with qualifying farm income must attach Schedule F to their 2016 Form 1040 or Form 1040NR.

Follow the steps below to accurately complete your 2016 Schedule F; note that steps 3, 5, and 6 include rules and figures specific to this tax year.

1. Gather Your Documents Before Starting

Collect all farm income records before beginning, including Form 1099-G for agricultural program payments, Form 1099-PATR for cooperative distributions, crop insurance statements, livestock sale receipts, and expense records for the 2016 tax year.

2. Choose the Correct Accounting Method [2016 Only]

Mark the accounting method at the top of Schedule F — cash or accrual. Cash method filers complete Parts I and II; accrual method filers complete Parts II and III and carry gross income from Part III, line 50, to Part I, line 9. The cash method is the most common for individual farmers filing a 2016 income tax return.

3. Report All Income on the Correct Lines [2016 Only]

Report resale livestock on line 1c, raised livestock and crops on line 2, cooperative distributions on line 3b, agricultural program payments on line 4b, CCC loans on lines 5a or 5c, crop insurance on line 6b, and custom hire on line 7. For 2016, CRP payments on Form 1099-G are taxable farm income on line 4b per IRS Publication 225.

4. Calculate Net Farm Profit or Loss

Add all income entries to get gross income on line 9, then subtract total farm expenses on line 33 for net profit or loss on line 34. Net profit is carried to Form 1040 and is subject to self-employment tax on Schedule SE, which determines Social Security benefits credits.

5. Choose Your Deductions and Apply Expense Rules [2016 Only]

Deductible 2016 farm expenses in Part II include car and truck expenses (line 10, Form 4562 required if depreciating), conservation expenses, depreciation, feed, fertilizers, freight, gasoline and fuel, insurance, interest, labor hired, seeds, supplies, taxes, utilities, and veterinary costs. Under Publication 463, vehicle expense deductions require contemporaneous mileage logs or actual expense records to substantiate car expenses on line 10.

6. Determine Passive Loss and At-Risk Rules [2016 Only]

If line 34 shows a loss, complete lines 35 and 36. Line 35 asks whether you received an applicable subsidy to limit the loss. Line 36 asks whether all investments are at risk; if some are not, Form 6198 is required.

Missing Schedule F (Form 1040) or Tax Records for 2016?

Late filers often lack original 2016 farm income documents, but IRS and Social Security Administration records can help reconstruct the information needed to file an accurate Schedule F. Official transcripts should always be used in place of any estimated figures.

IRS Wage & Income Transcript

This free transcript lists all income reported to the IRS by payers and financial institutions for tax year 2016 and is available online through IRS Get Transcript at IRS.gov.

IRS Account Transcript

The IRS account transcript shows estimated tax payments received, penalties applied, and adjustments made to the 2016 tax account, which is useful for reconciling any discrepancies before filing.

Social Security Administration

The SSA can provide wage records for 2016 if a W-2 is missing, and CRP income reported to the SSA may affect self-employment tax calculations and social security benefits.

Contact Prior Employers

If a Form 1099-G, Form 1099-PATR, or other income document is missing, contact the issuing agency or institution directly to request a duplicate copy for the 2016 tax year.

Do not estimate income figures on your 2016 Schedule F — use IRS transcripts to match records and reduce the risk of follow-up notices.

These are the most frequent errors causing IRS delays, rejected returns, or missed credits on 2016 Schedule F returns.

• Using the wrong tax year form — Submitting any version of Schedule F other than the official 2016 form results in automatic rejection; always confirm the correct tax year before mailing.
  
  
• Missing fuel tax credit on line 8 — Farmers who used fuel in 2016 farming and omitted the federal fuel tax credit on line 8 missed a legitimate income offset for that year.
  
  
• Wrong accounting method selected — Checking the wrong accounting method at the top of Schedule F causes income on incorrect lines, producing gross income errors that can trigger IRS notices.
  
  
• Applying CRP payment rules incorrectly — Conservation Reserve Program payments in 2016 are generally taxable on line 4b, but self-employment tax treatment depends on material participation and must be verified carefully.
  
  
• Treating crop insurance proceeds as tax-free — Crop insurance and federal disaster payments received in 2016 are taxable unless a valid deferral election was attached using the Schedule F line 6c checkbox.
  
  
• Assuming a refund is still available — The window to claim a 2016 refund closed around April 18, 2020; any refund not claimed by that date is permanently forfeited with limited exceptions.
  
  
• Missing or incorrect Social Security numbers — Omitting or entering an incorrect SSN at the top of Schedule F causes the IRS to reject or mispost the return, requiring a corrected filing.
  
  
• Unsigned return — A 2016 Form 1040 with Schedule F that is missing a signature is considered invalid by the IRS and will not be processed until resubmitted.
  
  
• Missing attachments — Omitting required forms such as Form 4562 for vehicle expenses or Form 6198 for at-risk losses, causes the IRS to disallow deductions or delay processing.
  

What is IRS Schedule F (Form 1040) (2016) used for?

IRS Schedule F (Form 1040) is used by sole proprietor farmers to report profit or loss from farming for the tax year 2016. It captures farm income — including livestock sales, CRP income, and custom hire — and deductible farm expenses to determine net profit and self-employment tax owed.

Can I still file a 2016 Schedule F tax return?

Yes, you can still file a late 2016 Schedule F after the April 18, 2017, deadline. Filing now stops the failure-to-file penalty from accruing. However, the three-year window to claim a refund closed around April 18, 2020, so most late filers will not be able to recover an overpayment.

What is the difference between Schedule F and Schedule C for farm income?

Schedule F reports income and expenses from farming operations you own and operate, including crops and livestock. Schedule C is used instead for agricultural services provided for a fee — such as soil preparation or farm management — and for income from breeding or raising pet animals.

Are CRP payments subject to self-employment tax on Schedule F?

CRP payments on Form 1099-G are generally taxable farm income on line 4b and subject to self-employment tax if the farmer actively participates. Under the Moorehouse case, certain retired or disabled farmers who did not materially participate may be exempt — consult IRS Publication 225 for your specific situation.

How do I report Commodity Credit Corporation loans on Schedule F?

If you elected to treat a CCC loan as income in 2016, report it on line 5a. If the loan was forfeited and treated as a sale, report the forfeited amount on line 5b and the taxable amount on line 5c, per IRS Publication 225, Farmer's Tax Guide.

What farm expenses are deductible on the 2016 Schedule F?

Deductible 2016 expenses include car costs (line 10), chemicals (11), conservation (12), custom hire (13), depreciation (14), feed (16), fertilizers (17), freight (18), fuel (19), insurance (20), interest (21), labor (22), rent (24), repairs (25), seeds (26), storage (27), supplies (28), taxes (29), utilities (30), and veterinary costs (31).

Do I need to file Form 1040 Schedule SE with my 2016 Schedule F?

Yes, if your 2016 net farm profit on Schedule F line 34 is $400 or more, you must file Form 1040 Schedule SE to calculate self-employment tax. Half of the self-employment tax is deductible as an above-the-line adjustment on your 2016 Form 1040, which reduces your adjusted gross income.

Can I use Form 4835 instead of Schedule F?

Form 4835 reports farm rental income under a crop-share arrangement when you did not materially participate in farming. If you operated the farm yourself or custom farmed your agricultural land, use Schedule F. Cash renting of farmland is reported on Schedule E, not on Schedule F or Form 4835.