The Internal Revenue Service has started a pilot program for auditing expenses farmers claim on Form 1040, Schedule F, which is used to report farm income and expenditures.

The IRS said the pilot auditing program, which runs from April 2017 to April 2018, is in reaction to concerns that taxpayers may be deducting expenses on the wrong form, deducting expenses that actually belong to another taxpayer or deducting hobby losses. Only 50 audits are being conducted through the pilot program. After it is completed, guidance may be incorporated into the Internal Revenue Manual.

“We wanted our members to be aware of this pilot audit program,” said Irene Messmer, OFBF’s chief financial officer. “It’s important to be exact when completing Form 1040, Schedule F and supplying the necessary documents to support deductions.”

The IRS said that in the pilot program, taxpayers are being asked to provide documentation to show they qualify for the questioned expenses. In general, a taxpayer may deduct reasonable, ordinary, necessary and business-related expenses on Schedule F. Occasionally, the items being verified appear to be verifiable deductions, but they should not be on a Schedule F. For example, they are not deductible on the Schedule F if they are related to the taxpayer’s full-time, off-the-farm job, Schedule A or a corporate return. These cases may also have start-up costs or a hobby loss where enjoyment of the property is the main focus of the farming activity.

Specifically, the pilot program is asking auditors to closely examine the following areas: custom hiring, gasoline, oil and fuel expenses, mortgage interest, repairs and maintenance and supplies.

Labor has always been an issue, mainly because we are a seasonal operation. So that's a challenge finding somebody who only wants to work three months out of a year, sometimes up to six months.
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Mandy Way

Way Farms

Farm Labor Resources
I appreciate the benefit of having a strong voice in my corner. The extras that are included in membership are wonderful, but I'm a member because of the positive impact to my local and state agricultural communities.
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Ernie Welch

Van Wert County Farm Bureau

Strong communities
I see the value and need to be engaged in the community I live in, to be a part of the decision-making process and to volunteer with organizations that help make our community better.
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Matt Aultman

Darke County Farm Bureau

Leadership development
Farm Bureau involvement has taught me how to grow my professional and leadership experience outside of the workforce and how to do that in a community-centric way.
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Jaclyn De Candio

Clark County Farm Bureau

Young Ag Professionals program
With not growing up on a farm, I’d say I was a late bloomer to agriculture. I feel so fortunate that I found the agriculture industry. There are so many opportunities for growth.
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Jenna Gregorich

Coshocton County Farm Bureau

Growing our Generation
Knowing that horticulture is under the agriculture umbrella and having Farm Bureau supporting horticulture like it does the rest of ag is very important.
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Jared Hughes

Groovy Plants Ranch

Groovy Plants Ranch
If it wasn't for Farm Bureau, I personally, along with many others, would not have had the opportunity to meet with our representatives face to face in Washington.
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Austin Heil

Hardin County Farm Bureau

Washington, D.C. Leadership Experience
So many of the issues that OFBF and its members are advocating for are important to all Ohioans. I look at OFBF as an agricultural watchdog advocating for farmers and rural communities across Ohio.
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Mary Smallsreed

Trumbull County Farm Bureau

Advocacy
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