Shedule J

[mdcowan]

If I farm and have three other businesses can I file a schedule "J" on the farm only

[MonikaK1]

Yes, Schedule J is intended for income from farming or fishing. Use Schedule J (Form 1040) to elect to figure your 2022 income tax by averaging, over the previous 3 years (base years), all or part of your 2022 taxable income from your trade or business of farming or fishing. This election may give you a lower tax if your 2022 income from farming or fishing is high and your taxable income for 1 or more of the 3 prior years was low.

You're not required to use all of your taxable farm and fishing income from the current year for income averaging, and it may be better to use only a portion. Whatever portion of your income you include, it’s called elected farm income on Schedule J, and it can include gain or loss from the sale of property and assets used in your business. It cannot exceed the taxable income reported on your Form 1040. Schedule J and its instructions guide you through the calculation of tax on your current year elected farm income as well as the three base years to calculate your averaged income.

To enter the needed information in TurboTax Online, open your return, then:

1. Select Other Tax Situations
2. Select Business Taxes and Deductions
3. Click Start next to Farm or fishing income averaging

Please see the IRS Instructions for Schedule J and this TurboTax article for more information.

[mdcowan]

Thank you for your prompt reply to my question about schedule J. One more question please.

 Do I use the farm income which was a loss? Or do I use my total of all businesses income each year? In other words the total taxable income from  each year as total adjusted gross income on 1040?  Thanks again,  MIKE

[RobertB4444]

You would just use the farm income and if it was a loss this year then you would not use schedule J this year.  You will use schedule J in a year when you have a profit in order to reduce the amount that you will have to pay taxes on.  So skip the schedule J for this year.

@mdcowan 

[mdcowan]

Thanks, Robert.

Perhaps I wasn't clear on my question. On Schedule J, all I can find are questions involving  total taxable income for each year beginning with 2019.  I have other businesses that affect my total taxable income whereas the farm resulted in a much higher profit as I had to combine two years of crop sales.  If I could find a form that consider only the farm income that would be great.  Thanks again. Mike

[RobertB4444]

The schedule J only takes the farm income into account for purposes of averaging, although it does make sure that your total income is at least as high as your farm income.

Here is a copy of schedule J.  Take a look at the math.  It takes the amount of farm income from 2019, 2020 and 2021 and averages it out in order to reduce the amount of income tax you pay on only the farm income portion of your taxable income.  So schedule J is exactly what you're looking for.

@mdcowan   

[mdcowan]

I'm sorry to be so dense but when I studied the instructions for Schedulr J, it only deals with total taxable income starting with 2019 because I did not average in any other year.  When I filled out the form it increases this years taxes by $1,000.  I do thank you for your time.

[mdcowan]

When I deleted the form J, my taxable amount as provided by the program, did not return to the previous amount. How do I delete the "J" and get Turbo tax to recognize it?

[RobertB4444 · Accepted solution]

Entering the form J into the system probably altered your schedule F and the calculation worksheets for the other forms associated with it.  Add the form J back into the return and then enter zeros into all the slots on the form that you entered numbers into.  That should fix the problem.

@mdcowan