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:
- Select Other Tax Situations
- Select Business Taxes and Deductions
- Click Start next to Farm or fishing income averaging
Please see the IRS Instructions for Schedule J and this TurboTax article for more information.
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