Use Schedule F (Form 1040) to report farm income and expenses. File it with Form 1040, 1040NR, 1041, 1065, or 1065-B.
Your farming activity may subject you to state and local taxes and other requirements such as business licenses and fees. Check with your state and local governments for more information.taxmap/instr/i1040sf-000.htm#TXMP1e9222d5
Pub. 225 has examples of filled-in forms and schedules, and lists important dates that apply to farmers.taxmap/instr/i1040sf-000.htm#TXMP42b03cc6taxmap/instr/i1040sf-000.htm#TXMP5574377a
For property placed in service during a tax year beginning in 2008, the limit for the section 179 deduction to expense certain depreciable business property has been increased to $250,000. This limit will be reduced when the total cost of section 179 property placed in service during the tax year exceeds $800,000.taxmap/instr/i1040sf-000.htm#TXMP712e9fae
In addition to the increase discussed above, the higher section 179 deduction has been extended for qualified section 179 GO Zone property when substantially all of the use is in specified portions of the GO Zone and is placed in service in 2008. For the location of specified GO Zone portions, see Notice 2007-36.taxmap/instr/i1040sf-000.htm#TXMP200eb995
For qualifying property acquired and placed in service in 2008, you may be able to take a depreciation deduction equal to 50% of the adjusted basis of the property. Qualifying property includes certain property with a recovery period of 20 years or less, certain computer software, water utility property, or qualified leasehold improvements. For more information, see Pub. 946.taxmap/instr/i1040sf-000.htm#TXMP7cc593c1
Beginning in 2008, farmers receiving social security retirement or disability benefits do not have to pay self-employment tax on CRP payments. CRP payments are still subject to income tax. taxmap/instr/i1040sf-000.htm#TXMP5b5bb273
The Indian employment credit has been extended for qualified wages paid to an employee through December 31, 2009.taxmap/instr/i1040sf-000.htm#TXMP1ed6a409
These rules were due to expire at the end of 2007 but have been extended to contributions made in 2008 and 2009.taxmap/instr/i1040sf-000.htm#TXMP58502fdd
This deduction was available for certain demolition and clean-up costs paid or incurred before January 1, 2008.taxmap/instr/i1040sf-000.htm#TXMP2fcb8c1c
The increased expensing limit was available for reforestation expenditures paid or incurred before January 1, 2008.taxmap/instr/i1040sf-000.htm#TXMP71f649e5taxmap/instr/i1040sf-000.htm#TXMP647d6bf4
The following tax benefits are available for qualifying Schedule F filers in the Kansas and Midwestern disaster areas.
- Employee retention credit for employers.
- Deduction for qualified demolition and clean-up costs.
- Increased section 179 deduction for qualified property.
- Special depreciation allowance for qualified property.
For information about these benefits, see:
- Pub. 4492-A, Information for Taxpayers Affected by the May 4, 2007, Kansas Storms and Tornadoes; and
- Pub. 4492-B, Information for Affected Taxpayers in the Midwestern Disaster Areas.
To claim a refund if you have already filed your 2007 tax return and have qualifying expenses for that year, file an amended return on Form 1040X, Amended U.S. Individual Income Tax Return, except as otherwise provided in Notice 2008-67. This notice is found on page 307 of Internal Revenue Bulletin 2008-32 at www.irs.gov/irb/2008-32_irb/ar14.html
The following tax benefits are available for qualifying Schedule F filers affected by federally declared disasters occurring after December 31, 2007, and before January 1, 2010.
- Deduction for qualified demolition and clean-up costs (see Pub. 535).
- Increased section 179 deduction for qualified property (see Pub. 946).
- Special depreciation allowance for qualified property (see Pub. 946).