This week, we will continue our discussion on farm tax information shared during the virtual Tax Strategies for Midwestern Farm and Ranch Women series. We will begin by talking about whether or not you should use a Schedule F or Schedule C.
A Schedule F reports the gains or losses from the sale of farm products raised for sale. It does not include gains or losses from the sale of land, depreciable farm equipment, building and structures, or livestock held for draft, breeding, sport, or dairy purposes. Generally speaking, for tax purposes, all individuals, partnerships, or corporations that cultivate, operate, or manage farms for gain or profit would file a Schedule F. If an individual’s business income is not derived from farming, it will generally be reported instead, on IRS Form 1040 - Schedule C, Profit and Loss from Business. This is where you would typically find processed ag products such as wine or packaged meat as examples.
As you may be aware, the federal government uses “brackets” to determine the tax rate to use on your “taxable income.” For 2023, if you are married filing jointing, the tax brackets are:
Bracket 1 $0-$22,000
Bracket 2 $22,001-$89,450
Bracket 3 $89,451-$190,750; and so on.
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Categories: Indiana, Business, Government & Policy