Schedule F Tax Basics

What is Schedule F in general terms?

Schedule F is a form that accompanies a personal income tax return and is used to report profit or loss from farming. It lists farm income from sales and other sources, subtracts farm expenses and arrives at a net figure. Whether you must or may use it depends on your facts, which is why a tax professional should confirm it.

Tax rules are set by the federal government and by each state, and they change over time. Treat anything you read in general articles as a prompt for questions, not as a conclusion about your own return.

Keep in mind that state income tax, sales tax and self-employment obligations may also apply, and each has its own rules. Ask your preparer to explain how the pieces fit together for a small farm like yours, and which state offices to contact.

Is my small farm a business for tax purposes?

Tax authorities distinguish between a business and a hobby, and the result affects how income and losses are treated. They look at factors such as whether you operate in a businesslike way, keep complete records, depend on the income, change methods to improve profit and have the knowledge to succeed.

This is a fact-based question that belongs with a tax preparer who knows farms. What you can do now is behave like a business: keep separate accounts, record everything, write down your plans and track whether the farm is moving toward profit.

If your farm shows a loss in the early years, that is common, but treatment of losses depends on the business versus hobby question and on other rules. Document your reasons for the loss, such as start-up costs and a weather event, and share them with your preparer.

• Separate bank account
• Complete income and expense records
• A written plan and goals
• Evidence that you adjust to improve results

What kinds of income go on the form?

Farm income can include sales of crops, livestock, eggs, dairy and other products, as well as some payments from programs, custom work and other farm-related receipts. Not every kind of receipt is treated the same way, and some may be reported differently depending on your accounting method.

Keep a sales log with dates, buyers, products and amounts. At markets, a daily summary sheet is a simple way to track cash and card sales. Hand your records to your preparer organized by income type.

Check whether any government payments, grants or cost-share funds you receive have special reporting rules. Ask the agency that paid you what paperwork it sends, and give those forms to your preparer.

What expense categories does the form use?

The form groups expenses into categories such as feed, seed, supplies, fuel, labor, repairs, insurance, utilities, interest, rent and depreciation. Using similar categories in your bookkeeping makes your records easier to transfer to the form.

Whether a particular cost is deductible, how it is treated and when, depends on rules and on your facts. Ask your tax preparer for a list of categories to use during the year, so you do not need to sort a year of receipts at filing time.

Keep copies of every return and its supporting records in a safe place. Ask your preparer how long to hold them, and how to reach them if a notice arrives.

Which accounting method will I use?

Farms generally use a cash method or an accrual method for tax reporting, and the rules about which you may use depend on your circumstances. The method affects the year in which income and expenses are counted.

Do not choose it from an article. Ask your preparer which method applies, why and what records it requires, and then set your bookkeeping up to match.

What should I bring to a tax preparer?

Bring summaries of income by product, expenses by category, bank and loan statements, records of equipment purchases and sales, mileage or vehicle use notes, and any forms you received from buyers or programs. A short list of questions helps too.

Find a preparer with farm experience by asking other farmers, your extension office or local farm organizations. Ask about fees up front and what services are included.

What mistakes should I avoid?

Common problems include mixing personal and farm money, losing receipts, ignoring small cash sales, guessing at categories and waiting until the filing deadline to organize records. Another is assuming that a rule used by another farm applies to yours.

A little organization during the year reduces stress and cost at filing time. Keep your records, ask questions early and let a qualified professional make the tax decisions.

Last reviewed: November 12, 2026. Written by the Homestead & Small Farm Editorial Team. See our editorial policy.