What SCHEDULE F (Form 1040) (2016) Is For

Schedule F (Form 1040) is the IRS form used to report profit or loss from farming operations (IRS Instructions for Schedule F (Form 1040), 2016).

If you operated a farm as a sole proprietor, single-member LLC, or as part of a qualified joint venture with your spouse in 2016, you must file Schedule F to report your farm income and deductible farm expenses.

The net profit or loss from Schedule F flows to Form 1040 and affects your overall taxable income, and any profit is generally subject to self-employment tax reported on Schedule SE (IRS Instructions for Schedule F (Form 1040), 2016).

When You'd Use SCHEDULE F (Form 1040) for 2016 (Late or Amended Filing)

You would need to file or amend Schedule F for 2016 if you never filed your 2016 return, received IRS notices about unfiled years, discovered unreported farm income or incorrectly claimed expenses, or need to correct errors that affect your tax liability.

Common scenarios include receiving CP2000 notices indicating income mismatches, filing to claim refunds before the statute expires, or responding to IRS collection notices for balance due.

For refunds, you generally have three years from the original filing deadline (April 18, 2017) or two years from the date you paid the tax to file and claim a refund, whichever is later (IRS Publication 556).

If you're filing late and owe taxes, penalties and interest will accrue from the original due date, but filing reduces additional penalties.

Request your IRS tax account transcript and wage and income transcript before preparing your late return to ensure you accurately report all income and withholdings (IRS Get Transcript service, IRS.gov).

Key Rules Specific to 2016

• Mileage rate: 54 cents per mile for business use of vehicles (IRS Instructions for Schedule F, 2016).
• Crop insurance deferral: Farmers using the cash method could defer certain crop insurance proceeds and disaster payments to 2017 if the damage occurred in 2016 (line 6c, with attached statement).
• Depreciation and Section 179: Use Form 4562 (2016) and related instructions to calculate deductions; 2016 limits and special allowances differ from current rules.
• Agricultural Act of 2014 payments: Price Loss Coverage and Agricultural Risk Coverage payments were included in income only in the year of receipt.
• Prepaid farm supplies limit: If prepaid supplies exceeded 50% of other deductible farm expenses, special limitations applied.
• Estimated tax exemption: Farmers meeting the two-thirds gross income test and filing by March 1, 2017 were exempt from estimated tax penalties (IRS Instructions for Schedule F, 2016).

Step-by-Step (High Level)

Step 1: Gather Your Income Documentation

Request your IRS tax account transcript and wage and income transcript online at IRS.gov/get-transcript or by calling 800-908-9946.
Verify all income reported to the IRS, including Forms 1099-PATR, 1099-G, CCC-1099-G, and W-2s.

Step 2: Collect Farm Records

Assemble:

• Receipts and invoices
• Mileage logs
• Depreciation schedules
• Bank statements documenting 2016 farm income and expenses

Reconcile these against IRS transcripts to ensure consistency.

Step 3: Complete the Correct-Year Forms

Use the 2016 version of:

• Schedule F (Form 1040)
• Form 1040 (2016)

Both available at IRS.gov/prior-year-forms.
If amending, use Form 1040-X and attach the corrected 2016 Schedule F.

Step 4: Attach Required Schedules

Include:

• Schedule SE (for self-employment tax)
• Form 4562 (for depreciation or Section 179 deduction)
• Form 4797 (for sales of livestock or equipment)
• Any other applicable forms referenced in the 2016 instructions

(IRS Instructions for Schedule F, 2016)

Step 5: Mail or E-File Appropriately

For late 2016 returns, you must paper-file to the address listed in the 2016 Form 1040 instructions for your state.
Electronic filing for 2016 returns is not available.

For amended returns beyond the current and two prior tax years, paper-file Form 1040-X to the address in the Instructions for Form 1040-X (IRS Topic No. 308).

Step 6: Keep Copies and Proof of Mailing

Retain:

• Photocopies or scans of your return and attachments
• Certified mail receipts as proof of filing

The IRS may require these for 3–6 years (IRS Publication 583).

Common Mistakes and How to Avoid Them

Using Current-Year Forms Instead of 2016 Forms

Always download and use 2016 forms from IRS.gov/prior-year-forms.
Using incorrect-year forms causes delays and potential rejection.

Failing to Reconcile Income with IRS Transcripts

Late filers often omit income already reported to the IRS on Forms 1099 or W-2.
Review your wage and income transcript carefully to include all reportable income.

Incorrectly Applying the Cash vs. Accrual Method

If using the cash method, report income when received and expenses when paid.
Mixing methods creates reporting errors (IRS Instructions for Schedule F, 2016).

Omitting Schedule SE or Miscalculating Self-Employment Tax

Farm net profit generally triggers self-employment tax.
Forgetting Schedule SE leads to IRS notices and extra tax owed.

Misunderstanding Depreciation Recapture or Passive Activity Limits

If you checked “No” for material participation or have suspended losses, you may need:

• Form 8582 for passive activity losses
• Form 4797 for depreciation recapture (IRS Publication 925)

Not Explaining Changes on Amended Returns

When filing Form 1040-X, clearly describe each correction in Part II.
Attach supporting documents — vague explanations delay processing and can trigger audits.

What Happens After You File

Processing Timeline and IRS Notices

The IRS typically processes paper-filed 2016 returns in 8–12 weeks, though older-year returns may take longer.

If you owe tax, you’ll receive a notice showing:

• Balance due
• Accrued penalties and interest (calculated from the 2017 due date)

Failure-to-file penalty: 5% per month (max 25%)
Failure-to-pay penalty: 0.5% per month (max 25%)

Payment Options

If you cannot pay in full:

• File Form 9465 (Installment Agreement Request)
• Apply online at IRS.gov/OPA for payment plans under $50,000

(IRS.gov, Payment Plans and Installment Agreements)

Refunds and Appeals

Refunds for 2016 late or amended returns are mailed or direct-deposited within several months, if filed within the statute of limitations.

If the IRS denies your claim or proposes changes:

• You’ll receive a notice explaining the adjustment
• You generally have 30 days to appeal to the IRS Office of Appeals or 90 days to petition Tax Court (IRS Publication 556)

Keep All Correspondence

Maintain copies of all notices, correspondence, and evidence.
Respond promptly to avoid escalation to enforced collection.

FAQs

Can I still get a refund for my 2016 farm taxes if I never filed?

Yes, if you file by April 18, 2020 (three years from the original due date) or within two years of paying the tax.
After that, any refund is forfeited to the Treasury (IRS Topic No. 308).

What penalties will I owe if I'm filing my 2016 Schedule F late and I have a balance due?

• Failure-to-file penalty: 5% per month (up to 25%)
• Failure-to-pay penalty: 0.5% per month (up to 25%)
• Interest: Compounds daily from April 2017

You may request penalty abatement with Form 843 or a written explanation.

Do I need to request transcripts before filing a late 2016 return, and how do I get them?

Yes. Request your 2016 tax account and wage & income transcripts from IRS.gov/get-transcript or call 800-908-9946.
These transcripts help verify income and withholdings.

If I file an amended 2016 Schedule F, do I also need to amend my state return?

Usually yes.
If your amended federal return changes AGI or taxable income, you must amend your state return as well.
Check your state revenue agency’s website for details.

Can I e-file a late or amended 2016 Schedule F return?

No. The IRS does not accept e-filed returns beyond the current year and two prior years.
Paper-file your 2016 return or 1040-X using certified mail.

What if I receive a CP2000 notice about unreported 2016 farm income?

A CP2000 is a proposed adjustment, not a bill.
Review it carefully and respond with supporting documentation, including your Schedule F and receipts, if you disagree.

Will filing my 2016 Schedule F late affect my Social Security credits for farming?

Yes. Farm self-employment income reported on Schedule F and SE contributes to your Social Security and Medicare credits.
File before the three years, three months, and 15 days deadline to ensure your 2016 credits count (IRS Publication 225).