Farmer Income Averaging

[cathe]

Can you actually put nothing down for elected farm income on the Sch J? I figured the farm net income and made sure I was not putting a larger dollar amount in than the taxable income from the 1040. That is what the instructions seemed to indicate I should do, but looking back at previous years that a different preparer did for my client and there is a big fat blank each year for EFI?
My client doesn't get any benefit from the Sch J this year doing it my way, but does if I leave it blank. Just doesn't feel right to me. Haven't done one of these before.

Cathe

[Roland Slugg]

Just doesn't feel right to me.

I understand what you mean, but it's always best to leave your "feelings" out of it and go by the tax laws and IRS rules and instructions. There is a "Tip" at the end of the instructions for line 2a ... URH corner of the Schedule J instructions, on page J2. It says ...

You don't have to include all of your taxable income from farming or fishing on line 2a. It may be to your advantage to include less than the entire amount, depending on how the amount you include on line 2a affects your tax bracket for the current and prior 3 tax years.