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pdfDepartment of the Treasury
Internal Revenue Service
2019 Instructions for Schedule J
Income
Averaging for
Farmers and
Fishermen
Use Schedule J (Form 1040 or 1040-SR) to elect to figure your 2019 income tax by
averaging, over the previous 3 years (base years), all or part of your 2019 taxable income from your trade or business of farming or fishing. This election may give you a
lower tax if your 2019 income from farming or fishing is high and your taxable income for 1 or more of the 3 prior years was low.
In order to qualify for this election, you aren't required to have been in the business
of farming or fishing during any of the base years.
You may elect to average farming or fishing income even if your filing status
wasn't the same in the election year and the base years.
This election doesn't apply when figuring your alternative minimum tax on Form
6251. Also, you don't have to refigure, because of this election, the tax liability of any
minor child who was required to use your tax rates in the prior years.
Section references are to the Internal
Revenue Code unless otherwise noted.
land or raising or harvesting any agricultural or horticultural commodity. This
includes:
1. Operating a nursery or sod farm;
2. Raising or harvesting of trees
bearing fruits, nuts, or other crops;
3. Raising ornamental trees (but not
evergreen trees that are more than 6
years old when severed from the roots);
4. Raising, shearing, feeding, caring
for, training, and managing animals; and
5. Leasing land to a tenant engaged
in a farming business, but only if the
lease payments are (a) based on a share
of the tenant's production (not a fixed
amount), and (b) determined under a
written agreement entered into before
the tenant begins significant activities on
the land.
Future Developments
For the latest information about developments related to Schedule J (Form
1040 or 1040-SR) and its instructions,
such as legislation enacted after they
were published, go to IRS.gov/
ScheduleJ.
General
Instructions
Prior Year Tax Returns
You may need copies of your original or
amended income tax returns for 2016,
2017, and 2018 to figure your tax on
Schedule J.
If you need copies of your tax returns, use Form 4506. There is a fee for
each return requested. See Form 4506
for the fee amount. If your main home,
principal place of business, or tax records are located in a federally declared
disaster area, this fee will be waived. If
you want a free transcript of your tax return or account, use Form 4506-T. See
your Form 1040 or 1040-SR instructions
to find out how to get these forms.
Keep a copy of your 2019 income tax
return to use for income averaging in
2020, 2021, or 2022.
Definitions
Farming business. A farming business
is the trade or business of cultivating
A farming business doesn't include:
• Contract harvesting of an agricultural or horticultural commodity grown
or raised by someone else, or
• Merely buying or reselling plants
or animals grown or raised by someone
else.
Fishing business. A fishing business is
the trade or business of fishing in which
the fish harvested, either in whole or in
part, are intended to enter commerce or
enter commerce through sale, barter, or
trade. This includes:
1. The catching, taking, or harvesting of fish;
2. The attempted catching, taking,
or harvesting of fish;
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Oct 17, 2019
Cat. No. 25514J
3. Any other activity which can reasonably be expected to result in the
catching, taking, or harvesting of fish;
4. Any operations at sea in support
of, or in preparation for, any activity described in (1) through (3) above;
5. Leasing a fishing vessel, but only
if the lease payments are (a) based on a
share of the catch (or a share of the proceeds from the sale of the catch) from
the lessee's use of the vessel in a fishing
business (not a fixed payment), and (b)
determined under a written lease entered
into before the lessee begins any significant fishing activities resulting in the
catch; and
6. Compensation as a crew member
on a vessel engaged in a fishing business, but only if the compensation is
based on a share of the catch (or a share
of the proceeds from the sale of the
catch).
The word “fish” means finfish, mollusks, crustaceans, and all other forms of
marine animal and plant life other than
marine mammals and birds.
A fishing business doesn't include
any scientific research activity conducted by a scientific research vessel.
Settlement from Exxon Valdez liti
gation. You will be treated as engaged
in a fishing business with respect to any
qualified settlement income you received if either of the following applies.
1. You were a plaintiff in the civil
action In re Exxon Valdez, No.
89-095-CV (HRH) (Consolidated) (D.
Alaska); or
2. All of the following apply.
a. You were a beneficiary of a
plaintiff described in (1) above.
b. You acquired the right to receive
qualified settlement income from that
plaintiff.
c. You were the spouse or an immediate relative of that plaintiff.
Qualified settlement income is any
taxable interest and punitive damage
awards you received (whether as lump
sums or periodic payments) in connection with the Exxon Valdez civil action
described above. Qualified settlement
income includes all such awards, whether received before or after the judgment
and whether related to a settlement or a
judgment.
Additional Information
See Pub. 225 and Regulations section
1.1301-1 for more information.
Specific
Instructions
Line 2a
Elected Farm Income
To figure your elected farm income, first
figure your taxable income from farming or fishing. This includes all income,
gains, losses, and deductions attributable
to your farming or fishing business. If
you conduct both farming and fishing
businesses, you must figure your elected
farm income by combining income,
gains, losses, and deductions attributable
to your farming and fishing businesses.
Elected farm income also includes
any gain or loss from the sale or other
disposition of property regularly used in
your farming or fishing business for a
substantial period of time. However, if
such gain or loss is realized after cessation of the farming or fishing business,
the gain or loss is treated as attributable
to a farming or fishing business only if
the property is sold within a reasonable
time after cessation of the farming or
fishing business. A sale or other disposition within 1 year of the cessation is
considered to be within a reasonable
time.
Elected farm income doesn't include
income, gain, or loss from the sale or
other disposition of land or from the sale
of development rights, grazing rights,
and other similar rights.
You should find your income, gains,
losses, and deductions from farming or
fishing reported on different tax forms,
such as:
• 2019 Form 1040 or Form
1040-SR, line 1, or Form 1040-NR,
line 8, income from wages and other
compensation you received (a) as a
shareholder in an S corporation engaged
in a farming or fishing business, or (b)
as a crew member on a vessel engaged
in a fishing business (but see Fishing
business, earlier);
• 2019 Schedule 1 (Form 1040 or
1040-SR), line 8, or Form 1040-NR,
line 21, income from Exxon Valdez litigation;
• 2019 Schedule 1 (Form 1040 or
1040-SR), line 14, or Form 1040-NR,
line 27, deductible part of self-employment tax, but only to the extent that deduction is attributable to your farming or
fishing business;
• 2019 Form 1040 or 1040-SR,
line 11b, or Form 1040-NR, line 41,
CCF reduction, except to the extent that
any earnings (without regard to the carryback of any net operating or net capital loss) from the operation of agreement
vessels in the fisheries of the United
States or in the foreign or domestic commerce of the United States aren't attributable to your fishing business;
• Schedule C;
• Schedule D;
• Schedule E, Part II;
• Schedule F;
• Form 4797;
• Form 4835;
• Form 8903, Domestic Production
Activities Deduction, but only to the extent that deduction is attributable to your
farming or fishing business; and
• Form 8949.
Your elected farm income is the
amount of your taxable income from
farming or fishing that you elect to include on line 2a.
You don't have to include all of
TIP 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.
The excess farm loss rules don't apply for tax years beginning after 2017.
The excess business loss disallowance
rule replaces the limitation on excess
farm loss. Your elected farm income
can’t include excess business losses. See
the Instructions for Schedule F (Form
1040 or 1040-SR) and Form 461.
Your elected farm income can't exceed your taxable income.
Lines 2b and 2c
Complete lines 2b and 2c if the amount
of your elected farm income on line 2a
includes net capital gain. Net capital
gain is the excess, if any, of net
long-term capital gain over net
short-term capital loss.
Line 2b. Enter on line 2b the portion of
your elected farm income on line 2a
treated as a net capital gain. The amount
you enter on line 2b can't exceed the
smaller of your total net capital gain or
the net capital gain attributable to your
farming or fishing business.
Line 2c. Enter on line 2c the smaller of
line 2b or the unrecaptured section 1250
gain attributable to your farming or fishing business, if any.
Line 4
Figure the tax on the amount on line 3
using:
• The 2019 Tax Table, Tax Computation Worksheet, or Qualified Dividends and Capital Gain Tax Worksheet
from the 2019 Instructions for Form
1040 or 1040-SR or Form 1040-NR;
• The 2019 Foreign Earned Income
Tax Worksheet from the 2019 Instructions for Form 1040 or 1040-SR; or
• The Schedule D Tax Worksheet in
the 2019 Instructions for Schedule D.
Enter the tax on line 4.
Line 5
If you used Schedule J to figure your tax
for:
J-2
• 2018 (that is, you entered the
amount from the 2018 Schedule J,
line 23; on your 2018 Form 1040,
line 11a; on your 2018 Form 1040NR,
line 42; or on Form 1040X for 2018),
enter on line 5 the amount from your
2018 Schedule J, line 11.
• 2017 but not 2018, enter on line 5
the amount from your 2017 Schedule J,
line 15.
• 2016 but not 2017 or 2018, enter
on line 5 the amount from your 2016
Schedule J, line 3.
If you figured your tax for 2016,
2017, and 2018 without using Schedule J, enter on line 5 the taxable income
from your 2016 tax return (or as previously adjusted by the IRS, or corrected
on an amended return). But if that
amount is zero or less, complete the
2016 Taxable Income Worksheet to figure the amount to enter on line 5.
If you didn't file a tax return for
2016, use the amount you would have
reported as your taxable income had you
been required to file a tax return. Be
sure to keep all your records for 2016
for at least 3 years after April 15, 2020
(or the date you file your 2019 tax return, if later).
Instructions for 2016 Taxable
Income Worksheet
Line 2. Any net capital loss deduction
on your 2016 Schedule D, line 21, isn't
allowed for income averaging purposes
to the extent it didn't reduce your capital
loss carryover to 2017. This could happen if the taxable income before subtracting exemptions—shown on your
2016 Form 1040, line 41, or your 2016
Form 1040NR, line 39 (or as previously
adjusted)—was less than zero. Enter on
line 2 the amount by which your 2016
capital loss carryover to 2017 (the sum
of your short- and long-term capital loss
carryovers) exceeds the excess of the
loss on your 2016 Schedule D, line 16,
over the loss on your 2016 Schedule D,
line 21. If you had any Net Operating
Loss (NOL) carrybacks to 2016, be sure
you refigured your 2016 capital loss carryover to 2017.
Line 3. If you had an NOL for 2016,
enter the amount of that NOL from the
2016 Form 1045, Schedule A, line 25,
you filed with Form 1045 or Form
1040X. If you didn't have an NOL for
2016, enter the portion, if any, of the
NOL carryovers and carrybacks to 2016
that weren't used in 2016 and were carried to years after 2016.
Example. John Farmington, who is
single, didn't use income averaging for
2016, 2017, or 2018. For 2019, John has
$18,000 of elected farm income on
Schedule J, line 2a. The taxable income
before subtracting exemptions on his
2016 Form 1040, line 41, is $4,900. A
deduction for exemptions of $4,050 is
shown on line 42, and line 43, taxable
income, is $850. However, John had a
$20,550 NOL for 2017, $9,000 of which
was remaining to carry to 2016 after the
NOL was carried back to 2015. To complete line 1 of the 2016 Taxable Income
Worksheet, John combines the $9,000
NOL deduction with the $850 from his
2016 Form 1040, line 43. The result is a
negative $8,150, John's 2016 taxable income, which he enters as a positive
amount on line 1 of the 2016 Taxable
Income Worksheet.
When John filed his 2016 tax return,
he had a $3,000 net capital loss deduction on Schedule D, line 21 (which was
also entered on Form 1040, line 13), a
$7,000 loss on Schedule D, line 16, and
a $4,000 capital loss carryover to 2017.
However, when John carried back the
2017 NOL ($9,000 of which was carried
to 2016), he refigured his 2016 capital
loss carryover to 2017 as $7,000. John
adds the $3,000 from Schedule D,
line 21, and the $7,000 capital loss carryover. He subtracts from the $10,000
result the $7,000 loss on his Schedule D,
line 16, and enters $3,000 on line 2 of
the worksheet.
John had $850 of taxable income in
2016 that reduced the 2017 NOL carryback. The $4,050 exemption deduction
and $3,000 net capital loss deduction also reduced the amount of the 2017 NOL
carryback. As a result, only $1,100
($9,000 – $850 – $4,100 – $3,000 =
J-3
$1,100) was available to carry to 2018
and later years, as shown on his 2017
Form 1045, Schedule B, line 10. John
enters the $1,100 on line 3 of the worksheet, and $4,100 ($1,100 plus the
$3,000 line 2 amount) on line 4. He then
subtracts the $4,100 from the $8,150 on
line 1 and enters the result, $4,050, on
line 5 of the worksheet. He enters a negative $4,050 on Schedule J, line 5. He
combines that amount with the $6,000
on Schedule J, line 6, and enters $1,950
on Schedule J, line 7.
Line 8
If line 7 is zero, enter -0- on line 8. Otherwise, figure the tax on the amount on
line 7 using:
• The 2016 Tax Rate Schedules below;
• The 2016 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2016 Schedule D Tax Worksheet in the 2016 Schedule D instructions (but use the 2016 Tax Rate Schedules below when figuring the tax on
lines 34 and 36 of the Schedule D Tax
Worksheet); or
• The 2016 Foreign Earned Income
Tax Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2016
Schedule D Tax Worksheet to figure the
tax on the amount on line 7. However, if
you filed Form 2555 or 2555-EZ for
2016, you must first complete the 2016
Foreign Earned Income Tax Worksheet,
and then use the 2016 Schedule D Tax
Worksheet to figure the tax on the
amount on line 3 of the Foreign Earned
Income Tax Worksheet.
When completing the Schedule D
Tax Worksheet, you must allocate 1/3 of
the amount on Schedule J, line 2b (and
1/3 of the amount on line 2c, if any) to
2016. If for 2016 you had a capital loss
that resulted in a capital loss carryover
to 2017, don't reduce the elected farm
income allocated to 2016 by any part of
the carryover.
2016 Taxable Income Worksheet—Line 5
Keep for Your Records
Complete this worksheet if you didn't use Schedule J to figure your tax for 2017 and 2018 and your 2016 taxable income was zero or
less. See the instructions above before completing this worksheet for line 5.
1. Figure the taxable income from your 2016 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2016, don't include any NOL carryovers or carrybacks to 2016. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2016 Schedule D, line 21, add that loss (as a positive
amount) and your 2016 capital loss carryover to 2017. Subtract from that sum the
2.
amount of the loss on your 2016 Schedule D, line 16, and enter the result . . . . . . . .
3. If you had an NOL for 2016, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2016
that weren't used in 2016 and were carried to years after 2016 . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . . . . . . . . .
5.
1.
2016 Tax Rate Schedules—Line 8
Schedule X—Use if your 2016 filing status was Single or you
checked filing status box 1 or 2 on Form 1040NR
If
Schedule J,
line 7, is:
Over—
But not
over—
Enter on
Schedule J,
line 8
$0
$9,275
...........
9,275
37,650
$927.50
37,650
91,150
of the
amount
over—
Schedule Y-2—Use if your 2016 filing status was Married filing separately
or you checked filing status box 3, 4, or 5 on Form 1040NR
If
Schedule J,
line 7, is:
Over—
But not
over—
Enter on
Schedule J,
line 8
10%
$0
$0
$9,275
...........
+
15%
9,275
9,275
37,650
$927.50
5,183.75
+
25%
37,650
37,650
75,950
91,150 190,150
18,558.75
+
28%
91,150
190,150 413,350
46,278.75
+
33%
413,350 415,050
119,934.75 +
35%
415,050 .............
120,529.75 +
39.6% 415,050
10%
$0
+
15%
9,275
5,183.75
+
25%
37,650
75,950 115,725
14,758.75
+
28%
75,950
190,150
115,725 206,675
25,895.75
+
33%
115,725
413,350
206,675 233,475
55,909.25
+
35%
206,675
233,475
65,289.25
+
39.6%
233,475
Schedule Y-1—Use if your 2016 filing status was Married
filing jointly or Qualifying widow(er) or you checked filing
status box 6 on Form 1040NR
If
Schedule J,
line 7, is:
Over—
But not
over—
$0 $18,550
18,550
Enter on
Schedule J,
line 8
...........
of the amount
over—
..........
Schedule Z—Use if your 2016 filing status was Head of household
of the
amount
over—
10%
$0
If
Schedule J,
line 7, is:
Over—
But not
over—
$0 $13,250
Enter on
Schedule J,
line 8
...........
of the amount
over—
10%
$0
75,300
$1,855.00
+
15%
18,550
13,250
50,400
$1,325.00
+
15%
13,250
75,300 151,900
10,367.50
+
25%
75,300
50,400 130,150
6,897.50
+
25%
50,400
151,900 231,450
29,517.50
+
28%
151,900
130,150 210,800
26,835.00
+
28%
130,150
231,450 413,350
51,791.50
+
33%
231,450
210,800 413,350
49,417.00
+
33%
210,800
413,350 466,950
111,818.50 +
35%
413,350
413,350 441,000
116,258.50
+
35%
413,350
466,950 ............
130,578.50 +
39.6% 466,950
441,000
125,936.00
+
39.6%
441,000
J-4
...........
Keep for Your Records
2016 Qualified Dividends and Capital Gain Tax Worksheet—Line 8
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2019 Schedule J, line 2a, doesn't include any net capital gain.
• You (a) entered qualified dividends on your 2016 Form 1040, line 9b (or your 2016 Form 1040A, line 9b, or 2016 Form 1040NR,
line 10b); (b) entered capital gain distributions directly on your 2016 Form 1040, line 13 (or your 2016 Form 1040A, line 10, or 2016 Form
1040NR, line 14) and weren't required to file Schedule D; or (c) filed Schedule D in 2016 and you answered “Yes” on lines 17 and 20 of that
Schedule D.
1.
4.
Amount from your 2019 Schedule J, line 7. If for 2016 you filed Form 2555 or 2555-EZ, enter the
amount from line 3 of the 2016 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . 1.
Amount from your 2016 Form 1040, line 9b* (or your 2016 Form 1040A,
line 9b, or 2016 Form 1040NR, line 10b) . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2016?*
Enter the smaller of line 15 or 16 of your 2016 Schedule D,
Yes. but don't enter less than -03.
Enter the amount from your 2016 Form 1040, line 13 (or your
No. 2016 Form 1040A, line 10, or 2016 Form 1040NR, line 14)
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5.
Amount, if any, from your 2016 Form 4952, line 4g . . . . . . . . . . . . . . . . .
2.
3.
6.
5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.
7.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
8.
Enter one of the following three amounts depending on your
filing status:
• $37,650 if single or married filing separately, or if you checked filing
status box 1, 2, 3, 4, or 5 on Form 1040NR;
.........
• $75,300 if married filing jointly or qualifying widow(er) or if you
checked filing status box 6 on Form 1040NR;
• $50,400 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.
10.
11.
12.
13.
14.
8.
9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
16.
Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
Enter one of the following amounts depending on your filing status:
• $415,050 if single, or if you checked filing status box 1 or 2 on Form
1040NR;
• $233,475 if married filing separately, or if you checked filing status
box 3, 4, or 5 on Form 1040NR;
. . . . . . . . . 15.
• $466,950 if married filing jointly or qualifying widow(er), or if you
checked filing status box 6 on Form 1040NR;
• $441,000 if head of household.
.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17.
Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18.
Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19.
Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20.
Multiply line 19 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
15.
21.
22.
23.
24.
25.
26.
27.
Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
Multiply line 22 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
Figure the tax on the amount on line 7. Use the 2016 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
Figure the tax on the amount on line 1. Use the 2016 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
Tax. Enter the smaller of line 25 or line 26 here and on your 2019 Schedule J, line 12. If for 2016 you filed Form 2555
or 2555-EZ, don't enter this amount on Schedule J, line 12. Instead, enter it on line 4 of the 2016 Foreign Earned
Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
*If for 2016 you filed Form 2555 or 2555-EZ, see the footnote in the 2016 Foreign Earned Income Tax Worksheet before completing this line.
J-5
2016 Foreign Earned Income Tax Worksheet—Line 8
Keep for Your Records
Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2016 Form 1040 using
Form 2555 or 2555-EZ. However, if Schedule J, line 11, is zero or less, don't complete this worksheet.
1. Enter the amount from your 2019 Schedule J, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2a. Enter the amount from your (and your spouse's, if filing jointly) 2016 Form 2555, lines 45 and 50,
or Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a.
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2016
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b.
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.
3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Figure the tax on the amount on line 3. Use the 2016 Tax Rate Schedules, the 2016 Qualified
Dividends and Capital Gain Tax Worksheet,* or the 2016 Schedule D Tax Worksheet in the 2016
Schedule D instructions,* whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Figure the tax on the amount on line 2c. Use the 2016 Tax Rate Schedules. . . . . . . . . . . . . . . . . . . . 5.
6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on
your 2019 Schedule J, line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
*Enter the amount from line 3 above on line 1 of the 2016 Qualified Dividends and Capital Gain Tax Worksheet or the 2016 Schedule D Tax
Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if
you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess,
subtract the amount from your 2019 Schedule J, line 7, from line 6 of your 2016 Qualified Dividends and Capital Gain Tax Worksheet (line 10
of your 2016 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.
If you didn't have a capital gain excess, complete the rest of either of those worksheets according to the worksheet's instructions. Then
complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2016 Qualified Dividends and Capital Gain Tax Worksheet or 2016 Schedule D Tax
Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5
and 6 above. These modifications are to be made only for purposes of filling out the 2016 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2016 Qualified Dividends and Capital Gain Tax
Worksheet or line 9 of your 2016 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2016 Qualified Dividends and Capital Gain Tax
Worksheet or line 6 of your 2016 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2016 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2016 Unrecaptured Section 1250 Gain Worksheet in the 2016 Instructions for
Schedule D (Form 1040).
J-6
Line 9
If you used Schedule J to figure your tax
for:
• 2018 (that is, you entered the
amount from the 2018 Schedule J,
line 23; on your 2018 Form 1040,
line 11; 2018 Form 1040NR, line 42; or
2018 Form 1040X), enter on line 9 the
amount from your 2018 Schedule J,
line 15.
• 2017 but not 2018, enter on line 9
the amount from your 2017 Schedule J,
line 3.
If you figured your tax for both 2017
and 2018 without using Schedule J, enter on line 9 the taxable income from
your 2017 tax return (or as previously
adjusted by the IRS or corrected on an
amended return). But if that amount is
zero or less, complete the worksheet below to figure the amount to enter on
line 9.
If you didn't file a tax return for
2017, use the amount you would have
reported as your taxable income had you
been required to file a tax return. Be
sure to keep all your records for 2017
until at least 3 years after April 15, 2020
(or the date you file your 2019 tax return, if later).
Instructions for 2017 Taxable
Income Worksheet
Line 2. Any net capital loss deduction
on your 2017 Schedule D, line 21, isn't
allowed for income averaging purposes
to the extent it didn't reduce your capital
loss carryover to 2018. This could happen if the taxable income before subtracting exemptions—shown on your
2017 Form 1040, line 41, or your 2017
Form 1040NR, line 39 (or as previously
adjusted)—was less than zero. Enter on
line 2 the amount by which your 2017
capital loss carryover to 2018 (the sum
of your short- and long-term capital loss
carryovers) exceeds the excess of the
loss on your 2017 Schedule D, line 16,
over the loss on your 2017 Schedule D,
line 21. If you had any NOL carrybacks
to 2017, be sure you refigured your 2017
capital loss carryover to 2018.
Line 3. If you had an NOL for 2017,
enter the amount of that NOL from the
2017 Form 1045, Schedule A, line 25,
you filed with Form 1045 or Form
1040X. If you didn't have an NOL for
2017, enter the portion, if any, of the
NOL carryovers and carrybacks to 2017
that weren't used in 2017 and were carried to years after 2017.
Example. John Farmington didn't
use income averaging for 2016, 2017, or
2018. The taxable income before subtracting exemptions on his 2017 Form
1040, line 41, is a negative $29,900. A
deduction for exemptions of $4,050 is
shown on line 42, and line 43, taxable
income, is limited to zero. John subtracts
from the $29,900 loss the $4,050 deduction for exemptions. The result is a negative $33,950, John's 2017 taxable income, which he enters as a positive
amount on line 1 of the 2017 Taxable
Income Worksheet.
2016 Taxable Income Worksheet—Line 9
When John filed his 2017 tax return,
he had a $3,000 net capital loss deduction on Schedule D, line 21 (which was
also entered on Form 1040, line 13), and
a $7,000 loss on Schedule D, line 16 (as
adjusted). He also had a $7,000 capital
loss carryover to 2018.
John adds the $3,000 from Schedule D, line 21, and the $7,000 capital
loss carryover. He subtracts from the
$10,000 result the $7,000 loss on his
Schedule D, line 16, and enters $3,000
on line 2 of the worksheet.
John enters $20,550 on line 3 of the
worksheet, the 2017 NOL from his 2017
Form 1045, Schedule A, line 25. Of the
$33,950 negative taxable income, the
$4,050 deduction for exemptions, the
$3,000 capital loss deduction, and his
$6,350 standard deduction weren't allowed in figuring the NOL. John had a
$20,550 loss on his 2017 Schedule F,
the only other item on his 2017 tax return.
John enters $23,550 (the $3,000
line 2 amount plus the $20,550 line 3
amount) on line 4 and $10,400 (the
$33,950 line 1 amount minus the
$23,550 line 4 amount) on line 5. He enters $10,400 as a negative amount on
Schedule J, line 9. He enters $6,000 on
Schedule J, line 10, and a negative
$4,400 on Schedule J, line 11. If he uses
Schedule J to figure his tax for 2020, he
will enter the negative $4,400 amount
on his 2020 Schedule J as his 2017 taxable income for income averaging purposes.
Keep for Your Records
Complete this worksheet if you didn’t use Schedule J to figure your tax for 2018 and your 2017 taxable income was zero or less. See
the instructions above before completing this worksheet.
1. Figure the taxable income from your 2017 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2017, don't include any NOL carryovers or carrybacks to 2017. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2017 Schedule D, line 21, add that loss (as a positive
amount) and your 2017 capital loss carryover to 2018. Subtract from that sum the
amount of the loss on your 2017 Schedule D, line 16, and enter the result . . . . . . . .
2.
3. If you had an NOL for 2017, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2017
that weren't used in 2017 and were carried to years after 2017 . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 . . . . . . . . . . . . . . .
5.
J-7
1.
Line 12
If line 11 is zero or less, enter -0- on
line 12. Otherwise, figure the tax on the
amount on line 11 using:
• The 2017 Tax Rate Schedules below;
• The 2017 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2017 Schedule D Tax Worksheet in the 2017 Schedule D instructions (but use the 2017 Tax Rate Schedules below when figuring the tax on the
Schedule D Tax Worksheet, lines 42 and
44); or
• The 2017 Foreign Earned Income
Tax Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2017
Schedule D Tax Worksheet to figure the
tax on the amount on line 11. However,
if you filed Form 2555 or 2555-EZ for
2017, you must first complete the 2017
Foreign Earned Income Tax Worksheet,
and then use the 2017 Schedule D Tax
Worksheet to figure the tax on the
amount on line 3 of the Foreign Earned
Income Tax Worksheet.
When completing the Schedule D
Tax Worksheet, you must allocate 1/3 of
the amount on Schedule J, line 2b (and
1/3 of the amount on line 2c, if any) to
2017. If for 2017 you had a capital loss
that resulted in a capital loss carryover
to 2018, don't reduce the elected farm
income allocated to 2017 by any part of
the carryover.
2017 Tax Rate Schedules—Line 12
Schedule X—Use if your 2017 filing status was Single or you
checked filing status box 1 or 2 on Form 1040NR
If
Schedule J,
line 11, is:
Over—
But not
over—
Enter on
Schedule J,
line 12
$0
$9,325
...........
9,325
37,950
$932.50
37,950
91,900
of the
amount
over—
Schedule Y-2—Use if your 2017 filing status was Married filing separately
or you checked filing status box 3, 4, or 5 on Form 1040NR
If
Schedule J,
line 11, is:
Over—
But not
over—
Enter on
Schedule J,
line 12
10%
$0
$0
$9,325
...........
+
15%
9,325
$9,325
37,950
$932.50
5,226.25
+
25%
37,950
37,950
76,550
91,900 191,650
18,713.75
+
28%
91,900
191,650 416,700
46,643.75
+
33%
416,700 418,400
120,910.25 +
35%
418,400 .............
121,505.25 +
39.6% 418,400
10%
$0
+
15%
9,325
5,226.25
+
25%
37,950
76,550 116,675
14,876.25
+
28%
76,550
191,650
116,675 208,350
26,111.25
+
33%
116,675
416,700
208,350 235,350
56,364.00
+
35%
208,350
235,350
65,814.00
+
39.6%
235,350
Schedule Y-1—Use if your 2017 filing status was Married
filing jointly or Qualifying widow(er) or you checked filing
status box 6 on Form 1040NR
If
Schedule J,
line 11, is:
Over—
But not
over—
$0 $18,650
18,650
Enter on
Schedule J,
line 12
...........
of the amount
over—
..........
Schedule Z—Use if your 2017 filing status was Head of household
of the
amount
over—
10%
$0
If
Schedule J,
line 11, is:
Over—
But not
over—
$0 $13,350
Enter on
Schedule J,
line 12
...........
of the amount
over—
10%
$0
75,900
$1,865.00
+
15%
18,650
13,350
50,800
$1,335.00
+
15%
13,350
75,900 153,100
10,452.50
+
25%
75,900
50,800 131,200
6,952.50
+
25%
50,800
153,100 233,350
29,752.50
+
28%
153,100
131,200 212,500
27,052.50
+
28%
131,200
233,350 416,700
52,222.50
+
33%
233,350
212,500 416,700
49,816.50
+
33%
212,500
416,700 470,700
112,728.00 +
35%
416,700
416,700 444,550
117,202.50
+
35%
416,700
470,700 ............
131,628.00 +
39.6% 470,700
444,550
126,950.00
+
39.6%
444,550
J-8
...........
2017 Qualified Dividends and Capital Gain Tax Worksheet—Line 12
Keep for Your Records
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2019 Schedule J, line 2a, doesn't include any net capital gain.
• You (a) entered qualified dividends on your 2017 Form 1040, line 9b (or your 2017 Form 1040A, line 9b, or 2017 Form 1040NR, line 10b);
(b) entered capital gain distributions directly on your 2017 Form 1040, line 13 (or your 2017 Form 1040A, line 10, or 2017 Form 1040NR, line 14)
and weren't required to file Schedule D; or (c) filed Schedule D in 2017 and you answered “Yes” on lines 17 and 20 of that Schedule D.
1.
4.
Amount from your 2019 Schedule J, line 11. If for 2017 you filed Form 2555 or 2555-EZ,
enter the amount from line 3 of the 2017 Foreign Earned Income Tax Worksheet . . . . . . . . . 1.
Amount from your 2017 Form 1040, line 9b* (or your 2017 Form
1040A, line 9b, or 2017 Form 1040NR, line 10b) . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2017?*
Enter the smaller of line 15 or 16 of your 2017
Yes. Schedule D, but don't enter less than -03.
Enter the amount from your 2017 Form 1040,
No. line 13 (or your 2017 Form 1040A, line 10, or 2017
Form 1040NR, line 14)
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5.
Amount, if any, from your 2017 Form 4952, line 4g . . . . . . . . . . . . . .
2.
3.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter one of the following three amounts depending on your
filing status:
• $37,950 if single or married filing separately, or if you checked filing
status box 1, 2, 3, 4, or 5 on Form 1040NR;
. . . . . . . . . . 8.
• $75,900 if married filing jointly or qualifying widow(er) or if you
checked filing status box 6 on Form 1040NR;
• $50,800 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
16.
Enter one of the following amounts depending on your filing status:
• $418,400 if single, or if you checked filing status box 1 or 2 on Form
1040NR;
• $235,350 if married filing separately, or if you checked filing status
. . . . . . . . . . 15.
box 3, 4, or 5 on Form 1040NR;
• $470,700 if married filing jointly or qualifying widow(er), or if you
checked filing status box 6 on Form 1040NR;
• $444,550 if head of household.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17.
Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18.
Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19.
Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20.
Multiply line 19 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
21.
Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22.
Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
23.
Multiply line 22 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
24.
Figure the tax on the amount on line 7. Use the 2017 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2017 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2019 Schedule J, line 12. If for 2017 you filed Form
2555 or 2555-EZ, don't enter this amount on Schedule J, line 12. Instead, enter it on line 4 of the 2017 Foreign
Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
*If for 2017 you filed Form 2555 or 2555-EZ, see the footnote in the 2017 Foreign Earned Income Tax Worksheet before completing this line.
J-9
2017 Foreign Earned Income Tax Worksheet—Line 12
Keep for Your Records
Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2017 Form 1040 using
Form 2555 or 2555-EZ. However, if Schedule J, line 11, is zero or less, don't complete this worksheet.
1. Enter the amount from your 2019 Schedule J, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a. Enter the amount from your (and your spouse's, if filing jointly) 2017 Form 2555, lines 45 and 50,
or Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2017
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Figure the tax on the amount on line 3. Use the 2017 Tax Rate Schedules, the 2017 Qualified
Dividends and Capital Gain Tax Worksheet,* or the 2017 Schedule D Tax Worksheet in the 2017
Schedule D instructions,* whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Figure the tax on the amount on line 2c. Use the 2017 Tax Rate Schedules. . . . . . . . . . . . . . . . . . . .
6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on
your 2019 Schedule J, line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2a.
b.
c.
3.
4.
5.
6.
*Enter the amount from line 3 above on line 1 of the 2017 Qualified Dividends and Capital Gain Tax Worksheet or the 2017 Schedule D Tax
Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if
you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess,
subtract the amount from your 2019 Schedule J, line 11, from line 6 of your 2017 Qualified Dividends and Capital Gain Tax Worksheet
(line 10 of your 2017 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.
If you didn't have a capital gain excess, complete the rest of either of those worksheets according to the worksheet's instructions. Then
complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2017 Qualified Dividends and Capital Gain Tax Worksheet or 2017 Schedule D Tax
Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5
and 6 above. These modifications are to be made only for purposes of filling out the 2017 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2017 Qualified Dividends and Capital Gain Tax
Worksheet or line 9 of your 2017 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2017 Qualified Dividends and Capital Gain Tax
Worksheet or line 6 of your 2017 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2017 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2017 Unrecaptured Section 1250 Gain Worksheet in the 2017 Instructions for
Schedule D (Form 1040).
J-10
Line 13
If you used Schedule J to figure your tax
for 2018 (that is, you entered the amount
from the 2018 Schedule J, line 23, on
your 2018 Form 1040, line 11; on your
2018 Form 1040NR, line 42; or on Form
1040X for 2018), enter on line 13 the
amount from your 2018 Schedule J,
line 3.
If you didn't use Schedule J to figure
your tax for 2018, enter on line 13 the
taxable income from your 2018 tax return (or as previously adjusted by the
IRS or corrected on an amended return).
But if that amount is zero or less, complete the worksheet below to figure the
amount to enter on line 13.
If you didn't file a tax return for
2018, use the amount you would have
reported as your taxable income had you
been required to file a tax return. Be
sure to keep all your records for 2018
until at least 3 years after April 15, 2020
(or the date you file your 2019 tax return, if later).
Instructions for 2018 Taxable
Income Worksheet
Line 2. Any net capital loss deduction
on your 2018 Schedule D, line 21, isn't
allowed for income averaging purposes
to the extent it didn't reduce your capital
loss carryover to 2019. This could happen if the taxable income before sub-
tracting exemptions—shown on your
2018 Form 1040, line 10, or your 2018
Form 1040NR, line 41 (or as previously
adjusted)—was less than zero. Enter on
line 2 the amount by which your 2018
capital loss carryover to 2019 (the sum
of your short- and long-term capital loss
carryovers) exceeds the excess of the
loss on your 2018 Schedule D, line 16,
over the loss on your 2018 Schedule D,
line 21.
Line 3. If you had an NOL for 2018,
enter the amount of that NOL from the
2018 Form 1045, Schedule A, line 25,
you filed with Form 1045 or Form
1040X. If you didn't have an NOL for
2018, enter the portion, if any, of the
NOL carryovers and carrybacks to 2018
that weren't used in 2018 and were carried to years after 2018.
Example. John Farmington didn't
use income averaging for 2016, 2017, or
2018. The taxable income on his 2018
Form 1040, line 10, is a negative
$1,000. This amount includes an NOL
deduction on his 2018 Schedule 1 (Form
1040), line 21, of $1,100. The $1,100 is
the portion of the 2017 NOL that was remaining from 2016 to be carried to
2018. See the examples earlier. John’s
taxable income is limited to zero and he
doesn’t have an NOL for 2018. The result is a negative $1,000, John's 2018
taxable income, which he enters as a
positive amount on line 1 of the 2018
Taxable Income Worksheet.
2018 Taxable Income Worksheet—Line 13
When John filed his 2018 tax return,
he had a $3,000 net capital loss deduction on Schedule D, line 21 (which was
also entered on Schedule 1 (Form 1040),
line 13), a $7,000 loss on Schedule D,
line 16, and a $5,000 capital loss carryover to 2019 (his 2018 capital loss carryover to 2019 was $5,000, not $4,000,
because the amount on his Form 1040,
line 10, was a negative $1,000). John
adds the $3,000 from Schedule D,
line 21, and the $5,000 carryover. He
subtracts from the $8,000 result the
$7,000 loss on his Schedule D, line 16,
and enters $1,000 on line 2 of the worksheet.
John enters -0- on line 3 of the worksheet because he doesn't have an NOL
for 2018 and didn't have an NOL carryover from 2018 available to carry to
2019 and later years. The NOL deduction for 2018 of $1,100 was reduced to
zero because it didn't exceed his modified taxable income of $3,100. Modified
taxable income is figured by adding
back the $3,000 net capital loss deduction to taxable income (figured without
regard to the NOL deduction) of $100.
John enters $1,000 on line 4 and $0 on
line 5. He enters $0 on Schedule J,
line 13. He enters $6,000 on Schedule J,
line 14, and $6,000 on Schedule J,
line 15. If he uses Schedule J to figure
his tax for 2020, he will enter $6,000 on
his 2020 Schedule J as his 2018 taxable
income for income averaging purposes.
Keep for Your Records
Complete this worksheet if your 2018 taxable income was zero or less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2018 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2018, don't include any NOL carryovers or carrybacks to 2018. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2018 Schedule D, line 21, add that loss (as a positive
amount) and your 2018 capital loss carryover to 2019. Subtract from that sum the
amount of the loss on your 2018 Schedule D, line 16, and enter the result . . . . . . . .
2.
3. If you had an NOL for 2018, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2018
that weren't used in 2018 and were carried to years after 2018 . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 . . . . . . . . . . . . . .
5.
J-11
1.
Line 16
If line 15 is zero or less, enter -0- on
line 16. Otherwise, figure the tax on the
amount on line 15 using:
• The 2018 Tax Rate Schedules below;
• The 2018 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2018 Schedule D Tax Worksheet in the 2018 Schedule D instructions (but use the 2018 Tax Rate Schedules when figuring the tax on the Sched-
ule D Tax Worksheet, lines 42 and 44);
or
• The 2018 Foreign Earned Income
Tax Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2018
Schedule D Tax Worksheet to figure the
tax on the amount on line 15. However,
if you filed Form 2555 or 2555-EZ for
2018, you must first complete the 2018
Foreign Earned Income Tax Worksheet,
and then use the 2018 Schedule D Tax
Worksheet to figure the tax on the
amount on line 3 of the Foreign Earned
Income Tax Worksheet.
When completing the Schedule D
Tax Worksheet, you must allocate 1/3 of
the amount on Schedule J, line 2b (and
1/3 of the amount on line 2c, if any) to
2018. If for 2018 you had a capital loss
that resulted in a capital loss carryover
to 2019, don't reduce the elected farm
income allocated to 2018 by any part of
the carryover.
2018 Tax Rate Schedules—Line 16
Schedule X—Use if your 2018 filing status was Single or you
checked filing status box 1 or 2 on Form 1040NR
If
Schedule J,
line 15, is:
Over—
But not
over—
Enter on
Schedule J,
line 16
$0
$9,525
...........
9,525
38,700
$952.50
38,700
82,500
of the
amount
over—
Schedule Y-2—Use if your 2018 filing status was Married filing separately
or you checked filing status box 3, 4, or 5 on Form 1040NR
If
Schedule J,
line 15, is:
Over—
But not
over—
Enter on
Schedule J,
line 16
10%
$0
$0
$9,525
...........
+
12%
9,525
$9,525
38,700
$952.50
4,453.50
+
22%
38,700
38,700
82,500
82,500 157,500
14,089.50
+
24%
82,500
157,500 200,000
32,089.50
+
32%
200,000 500,000
45,689.50
+
500,000 .............
150,689.50 +
10%
$0
+
12%
9,525
4,453.50
+
22%
38,700
82,500 157,500
14,089.50
+
24%
82,500
157,500
157,500 200,000
32,089.50
+
32%
157,500
35%
200,000
200,000 300,000
45,689.50
+
35%
200,000
37%
500,000
300,000
80,689.50
+
37%
300,000
Schedule Y-1—Use if your 2018 filing status was Married
filing jointly or Qualifying widow(er) or you checked filing
status box 6 on Form 1040NR
If
Schedule J,
line 15, is:
Over—
But not
over—
$0 $19,050
19,050
Enter on
Schedule J,
line 16
...........
of the amount
over—
..........
Schedule Z—Use if your 2018 filing status was Head of household
of the
amount
over—
10%
$0
If
Schedule J,
line 15, is:
Over—
But not
over—
$0 $13,600
Enter on
Schedule J,
line 16
...........
of the amount
over—
10%
$0
77,400
$1,905.00
+
12%
19,050
13,600
51,800
$1,360.00
+
12%
13,600
77,400 165,000
8,907.00
+
22%
77,400
51,800
82,500
5,944.00
+
22%
51,800
165,000 315,000
28,179.00
+
24%
165,000
82,500 157,500
12,698.00
+
24%
82,500
315,000 400,000
64,179.00
+
32%
315,000
157,500 200,000
30,698.00
+
32%
157,500
400,000 600,000
91,379.00
+
35%
400,000
200,000 500,000
44,298.00
+
35%
200,000
600,000 ............
161,379.00 +
37%
600,000
500,000
149,298.00
+
37%
500,000
J-12
...........
2018 Qualified Dividends and Capital Gain Tax Worksheet—Line 16
Keep for Your Records
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2019 Schedule J, line 2a, doesn't include any net capital gain.
• You (a) entered qualified dividends on your 2018 Form 1040, line 3a (or Form 1040NR, line 10b); (b) entered capital gain distributions
directly on your 2018 Schedule 1 (Form 1040), line 13 (or 2018 Form 1040NR, line 14) and weren't required to file Schedule D; or (c) filed
Schedule D in 2018 and you answered “Yes” on lines 17 and 20 of that Schedule D.
1.
4.
Amount from your 2019 Schedule J, line 15. If for 2018 you filed Form 2555 or 2555-EZ,
enter the amount from line 3 of the 2018 Foreign Earned Income Tax Worksheet . . . . . . . . . 1.
Amount from your 2018 Form 1040, line 3a* (or 2018 Form 1040NR,
line 10b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2018?*
Enter the smaller of line 15 or 16 of your 2018
Yes. Schedule D, but don't enter less than -03.
Enter the amount from your 2018 Schedule 1 (Form
No. 1040), line 13 (or 2018 Form 1040NR, line 14)
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5.
Amount, if any, from your 2018 Form 4952, line 4g . . . . . . . . . . . . . .
2.
3.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.
Enter one of the following three amounts depending on your
filing status:
• $38,700 if single or married filing separately, or if you checked filing
status box 1, 2, 3, 4, or 5 on Form 1040NR;
. . . . . . . . . . 8.
• $77,400 if married filing jointly or qualifying widow(er) or if you
checked filing status box 6 on Form 1040NR;
• $51,850 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
Subtract line 10 from line 9. This amount is taxed at 0% . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.
Enter the smaller of line 1 or line 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.
Enter the amount from line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.
Subtract line 13 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.
16.
Enter one of the following amounts depending on your filing status:
• $426,700 if single, or if you checked filing status box 1 or 2 on Form
1040NR;
• $240,025 if married filing separately, or if you checked filing status
. . . . . . . . . . 15.
box 3, 4, or 5 on Form 1040NR;
• $480,050 if married filing jointly or qualifying widow(er), or if you
checked filing status box 6 on Form 1040NR;
• $453,350 if head of household.
Enter the smaller of line 1 or line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.
17.
Add lines 7 and 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17.
18.
Subtract line 17 from line 16. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18.
19.
Enter the smaller of line 14 or line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19.
20.
Multiply line 19 by 15% (0.15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20.
21.
Add lines 11 and 19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.
22.
Subtract line 21 from line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22.
23.
Multiply line 22 by 20% (0.20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23.
24.
Figure the tax on the amount on line 7. Use the 2018 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2018 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2019 Schedule J, line 16. If for 2018 you filed Form
2555 or 2555-EZ, don't enter this amount on Schedule J, line 16. Instead, enter it on line 4 of the 2018 Foreign
Earned Income Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
*If for 2018 you filed Form 2555 or 2555-EZ, see the footnote in the 2018 Foreign Earned Income Tax Worksheet before completing this line.
J-13
2018 Foreign Earned Income Tax Worksheet—Line 16
Keep for Your Records
Use this worksheet if you claimed the foreign earned income exclusion or housing exclusion on your 2018 Form 1040 using
Form 2555 or 2555-EZ. However, if Schedule J, line 15, is zero or less, don't complete this worksheet.
1. Enter the amount from your 2019 Schedule J, line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a. Enter the amount from your (and your spouse's, if filing jointly) 2018 Form 2555, lines 45 and 50,
or Form 2555-EZ, line 18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2018
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Figure the tax on the amount on line 3. Use the 2018 Tax Rate Schedules, the 2018 Qualified
Dividends and Capital Gain Tax Worksheet,* or the 2018 Schedule D Tax Worksheet in the 2018
Schedule D instructions,* whichever applies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Figure the tax on the amount on line 2c. Use the 2018 Tax Rate Schedules. . . . . . . . . . . . . . . . . . . .
6. Subtract line 5 from line 4. Enter the result. If zero or less, enter -0-. Also include this amount on
your 2019 Schedule J, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
2a.
b.
c.
3.
4.
5.
6.
*Enter the amount from line 3 above on line 1 of the 2018 Qualified Dividends and Capital Gain Tax Worksheet or the 2018 Schedule D Tax
Worksheet if you use either of those worksheets to figure the tax on line 4 above. Complete the rest of that worksheet through line 6 (line 10 if
you use the Schedule D Tax Worksheet). Next, you must determine if you had a capital gain excess. To find out if you had a capital gain excess,
subtract the amount from your 2019 Schedule J, line 15, from line 6 of your 2018 Qualified Dividends and Capital Gain Tax Worksheet
(line 10 of your 2018 Schedule D Tax Worksheet). If the result is more than zero, that amount is your capital gain excess.
If you didn't have a capital gain excess, complete the rest of either of those worksheets according to the worksheet's instructions. Then
complete lines 5 and 6 above.
If you had a capital gain excess, complete a second 2018 Qualified Dividends and Capital Gain Tax Worksheet or 2018 Schedule D Tax
Worksheet (whichever applies) as instructed above but in its entirety and with the following additional modifications. Then complete lines 5
and 6 above. These modifications are to be made only for purposes of filling out the 2018 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2018 Qualified Dividends and Capital Gain Tax
Worksheet or line 9 of your 2018 Schedule D Tax Worksheet by your capital gain excess.
2. Reduce (but not below zero) the amount you would otherwise enter on line 2 of your 2018 Qualified Dividends and Capital Gain Tax
Worksheet or line 6 of your 2018 Schedule D Tax Worksheet by any of your capital gain excess not used in (1) above.
3. Reduce (but not below zero) the amount on your 2018 Schedule D (Form 1040), line 18, by your capital gain excess.
4. Include your capital gain excess as a loss on line 16 of your 2018 Unrecaptured Section 1250 Gain Worksheet in the 2018 Instructions for
Schedule D (Form 1040).
Lines 19, 20, and 21
For example, your “tax” line may, in addition to the tax imposed by section 1,
include amounts from Forms 8814 or
4972; amounts from the recapture of an
education credit; or a repayment amount
for any excess of advance monthly payments of the health coverage tax credit.
J-14
If you amended your return or the
IRS made changes to it, make sure you
enter the corrected amount.
| File Type | application/pdf |
| File Title | 2019 Instructions for Schedule J |
| Subject | 2019 Instructions for Schedule J , Income Averaging for Farmers and Fishermen |
| Author | W:CAR:MP:FP |
| File Modified | 2019-10-31 |
| File Created | 2019-10-17 |