Be careful with the answers received. Contract Labor is not Custom Hire (Machine Work), it is Labor Hired
To clarify, IRS Schedule F Line 22 is named Labor Hired, the Turbotax input field is named Gross Wages
Log into your return, then...
I have included a couple screenshots to help get you started.
This answer is wrong. The IRS and farmers know that Custom Hire is not the same thing as Contract Labor. Custom Hire (Machine Work) is paid to large equipment operators who bring equipment onsite to due site prep work. There is no place for Contract Labor in TurboTax 2016 Self Employed. It appears that farmers cannot use Turbotax in 2016, because of this error. I called for help and was directed to this same wrong answer.
Custom Hire category in TurboTax can be used for ANY contract labor or services (large or small) that your farm hires where the service is provided by someone other than a W-2 employee. This includes anyone you issued a 1099-misc to. If you feel this does not describe the category correctly, you can always use Other Miscellaneous Expenses under Farm Expenses and label the expenses with your own description.
Are you saying the IRS is wrong and that you and Turbotax are right? Don't take my word for it, look at the proof. Look up Schedule F: Form 1040 Profit or Loss from Farming, Line 13, Custom Hire (Machine Work). That is not the same thing as contract labor and never has been.
Custom hire is contract hire OR machine hired work. It's a payment for work or services that have been done on your farm to another self employed person or business.
From IRS Instructions for schedule F, page F-6;
Line 13
Enter amounts paid for custom hire or machine work (the machine operator furnished the equipment). Don't include amounts paid for rental or lease of equipment you operated yourself. Instead, report those amounts on line 24a.
Custom Hire is for Machine Work only. It is Custom Hire (Machine Work) not Custom Hire / Machine Work.
IRS instructions indicate that contract labor should be entered on Line 22: Labor Hired.
See definition of Labor Hired:
"You can deduct reasonable wages paid for regular farm labor, piecework, contract labor, and other forms of labor hired to perform your farming operations." These are the IRS's own words found at <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p225/ch04.html#en_US_2016_publink1000217890">https://www.irs.gov/publications/p225/ch04.html#en_US_2016_publink1000217890</a>
I haven't completed the Turbotax process for 2016 yet, but they got the Custom Hire input field linked accurately to my Form 1040 in 2015, so hopefully the only problem here is that the experts are giving people the wrong answers.
The correct answer, straight from IRS publications, is that only Machine Hire work is entered as Custom Hire, and contract labor should be entered as Labor Hired.
Contract labor is entered on line 22, "Labor Hired," on Schedule F. Per the IRS Schedule F Instructions (page F-8), this line is used to report amounts paid for "farm labor." To enter your farm contract labor into TurboTax please see the instructions below:
Just another request as to how to see the screenshots or other attachments mentioned by previous posters in this forum.
I am not able to access the screenshots posted by other users. However, here are some screenshots that relate to the steps that were posted earlier.
Step #4 Farm Expenses
Step #5 Gross Wages