Can someone explain the difference between Schedule F and Form 4835 for farm tax returns?

The main difference is about who's actually running the farm operation. Schedule F is used when you're actively operating the farm yourself - you're the farmer making day-to-day decisions, paying expenses, and earning income directly from farm operations. Form 4835 is for reporting farm rental income when you're a landlord who has an arrangement with a tenant where you receive rental payments based on farm production rather than a flat fee. The key question is: Are you actively farming or are you renting out farmland to someone else who does the farming, with you getting a share of the production? If you're actively farming, use Schedule F. If you're renting land to someone else who farms it and you get a share of crops or livestock as payment, use Form 4835. Regarding Form 4562 for depreciation - yes, you still need it for Form 4835 if you have depreciable assets related to the farm rental. Both Schedule F and Form 4835 filers can claim depreciation on farm assets they own.

I've been working through similar farm tax issues and found a tool that's been super helpful for figuring out which forms to use. I was going back and forth between Schedule F and Form 4835 too because my situation is complicated - I own some land but also rent some under a crop-share arrangement. I was making mistakes that could have cost me thousands. I started using https://taxr.ai to help sort through my farm tax documents and it was a game changer. You can upload your previous year's return and any current documents, and it analyzes everything to tell you which forms apply to your specific situation. It even explains the differences between the forms in plain language and helps identify which deductions you qualify for. Saved me from filing the wrong forms and potentially getting audited.

Just wanted to follow up about my experience with https://taxr.ai that was mentioned earlier. I decided to try it with my complicated organic farm/livestock operation, and I'm honestly amazed. It quickly identified that I should be using Schedule F for most operations but Form 4835 for a portion of land I rent to my neighbor under a crop-share arrangement (something I didn't even realize needed separate reporting). The system explained exactly where to report my organic certification costs, how to handle depreciation for my greenhouse and equipment, and even identified some fuel tax credits I'd been missing. It also clarified when I need to use Form 4562 for my situation - basically anytime I have depreciable assets, regardless of which farm form I'm using. Definitely worth checking out if you're trying to figure out farm tax forms!

I've seen so many people struggling to reach the IRS with questions about farm returns. I was in the same boat trying to get clarification on Schedule F vs Form 4835 issues last year. After spending days trying to get through on the phone, I found https://claimyr.com and used their service to connect with an IRS agent within about 20 minutes instead of waiting for hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained that the main differentiator is "material participation" - if you materially participate in the farm operation (making decisions, doing work, etc), you use Schedule F. If you simply collect income based on what the farm produces but someone else does the actual farming, that's Form 4835. Getting that direct clarification saved me from filing incorrectly. Definitely recommend if you need to actually speak with someone at the IRS about your specific situation.

I need to eat my words about Claimyr from my comment above. After struggling for THREE DAYS trying to get through to the IRS about my farm tax situation, I gave in and tried the service. I was seriously shocked when I got a call back in about 45 minutes saying they had an IRS agent on the line. The agent was able to review my specific situation (I manage my dad's farm but he still has ownership) and confirmed I needed Schedule F since I'm materially participating, not Form 4835. She also explained exactly how to handle the payments I make to my dad for his ownership interest. This saved me from a potentially expensive mistake. I'm still amazed this actually worked - saved me so much time and frustration compared to the endless busy signals I was getting before.

Something that hasn't been mentioned yet is self-employment tax. This is actually a BIG difference between Schedule F and Form 4835: - Income reported on Schedule F is subject to self-employment tax (additional 15.3% for Social Security and Medicare) - Income reported on Form 4835 is NOT subject to self-employment tax This could make a huge difference in your tax liability. If you're actively farming (Schedule F), you'll pay SE tax but also build Social Security credits. If you're just a landlord getting crop share rent (Form 4835), no SE tax, but also no Social Security credits.

My tax guy explained this to me last year when I was confused. Here's a super simple way to think about it: Schedule F = You're the farmer Form 4835 = You're the landlord getting paid in crops And yes, you definitely still need Form 4562 for depreciation with either form if you have buildings, machinery, fences, etc. that you're depreciating.

One thing that might help clarify your situation is to think about the IRS "material participation" test. There are seven different tests, but the most relevant ones for farming are: 1. You participate in the farm activity for more than 500 hours during the year 2. Your participation constitutes substantially all of the participation by all individuals (including non-owners) in the activity 3. You participate more than 100 hours during the year, and your participation is not less than any other person's participation Since you mentioned you're making planting and harvesting decisions and overseeing workers, you're likely meeting the material participation test, which would make Schedule F the correct choice for your situation. The income-sharing arrangement with your parents doesn't automatically make it a rental situation - many family farming operations have informal profit-sharing agreements. However, you might want to consider formalizing this arrangement (maybe as a partnership or through a written agreement) to avoid any confusion if you're ever audited. Also, don't forget that if you use Schedule F, you can take advantage of farm-specific tax benefits like income averaging under Section 1301 if you have a large income spike in any given year!