Farm Loss Ignored by TurboTax

[bldiamant]

My farm income on Schedule F comes out to a loss of around $1000.  However, TurboTax shows this as a "$0" on the Income Summary screen.  Why?  I expect this loss to reduce my taxable income, but it has no effect on my refund because of the $0.

[RobertG]

TurboTax Deluxe does not support Schedule F expenses.  

To file a Schedule F you need TurboTax Self-Employed.

See TurboTax Deluxe for a list of forms supported by each version of TurboTax.  Select 'Tax Forms' near the bottom of the site.

[bldiamant]

Although the form is not listed as supported by Deluxe, Deluxe does in fact allow Schedule F to be completed, including a full, detailed list of expenses.  TurboTax recommends an upgrade when the farm interview is initiated, but the recommendation is to optimize expenses, not because it can't complete the form.  I have filed Schedule F for years using Deluxe, although I've shown a profit for the last decade.

If I adjust my farm income to be a gain, everything in the program works correctly (e.g., the gain is entered on Schedule 1 line 6, and my refund is reduced).  However, when I show a loss TurboTax enters a '0' on line 34 of schedule F, places the letters "PAL" next to that line, and checks "All investment is at risk" on Line 36.  Also, the loss does not appear on Schedule 1.

Are you saying Deluxe can only process a farm gain, but I need to upgrade TurboTax to report a loss?

[Rick19744]

The issue is most likely that Schedule F question E is answered "no".

In order to be able to utilize the loss, you must indicate that you materially participate; if in fact you did.

Check your response to the above question.

[bldiamant]

Yes, you are absolutely right.  Thank you for your thoughtful answer.  I finally figured this out after realizing that PAL stands for Passive Activity Loss.  An internet search (and a follow-up call from Intuit) taught me that losses from passive income (you're correct that I don't materially participate in the farm) can only be used to offset passive income gains.  Since I have no such gains on my return, TurboTax treats the loss as a zero.

I'll remind anyone else who sees this post that Intuit's website is wrong when it states Schedule F is not supported by TurboTax Deluxe.  Deluxe handles Schedule F just fine, and at a much lower price than the upgraded versions.