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Department of the Treasury
Internal Revenue Service
2023 Instructions for Schedule J
TREASURY/IRS
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October 6, 2023
Income
Averaging for
Farmers and
Fishermen
Use Schedule J (Form 1040) to elect to figure your 2023 income tax by averaging,
over the previous 3 years (base years), all or part of your 2023 taxable income from
your trade or business of farming or fishing. This election may give you a lower tax if
your 2023 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.
applied for Qualifying widow(er) apply
to Qualifying surviving spouse. We will
match the term to the year of use
throughout these instructions.
Future Developments
For the latest information about developments related to Schedule J (Form
1040) 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 2020,
2021, and 2022 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
the Instructions for Form 1040 to find
out how to get these forms.
Keep a copy of your 2023 income tax
return to use for income averaging in
2024, 2025, or 2026.
Note. For tax years beginning in
2022, the filing status “Qualifying widow(er)” is called “Qualifying surviving
spouse.” The rules for the filing status
have not changed. The same rules that
Definitions
Farming business. A farming business
is the trade or business of cultivating
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.
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
J-1
Sep 28, 2023
Cat. No. 25514J
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;
3. Any other activity that 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.
Additional Information
See Pub. 225 and Regulations section
1.1301-1 for more information.
Specific
Instructions
• 2023 Form 1040, 1040-SR, or
1040-NR, line 15, 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.
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.
TREASURY/IRS
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October 6, 2023
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 presumed 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:
• 2023 Form 1040 or 1040-SR, or
Form 1040-NR, line 1a, 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);
• 2023 Schedule 1 (Form 1040),
line 15, deductible part of self-employment tax, but only to the extent that deduction is attributable to your farming or
fishing business;
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 farm
ing 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 limitation rules
don't apply for tax years beginning after
2017 and before 2029. The excess farm
loss limitation rules are suspended during those years and replaced by the excess business loss limitation rules for tax
years beginning after 2020 and before
2029. The at-risk limits and the passive
activity limits are applied before calculating the amount of any excess business
loss. The amount of any excess business
loss allocable to your farming or fishing
business(es) is not used in calculating
the amount of your elected farm income.
See generally the Instructions for Schedule F (Form 1040) 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
J-2
Line 4
Figure the tax on the amount on line 3
using:
• The 2023 Tax Table, Tax Computation Worksheet, or Qualified Dividends and Capital Gain Tax Worksheet
from the 2023 Instructions for Form
1040 or the 2023 Instructions for Form
1040-NR;
• The 2023 Foreign Earned Income
Tax Worksheet from the 2023 Instructions for Form 1040; or
• The Schedule D Tax Worksheet in
the 2023 Instructions for Schedule D.
Enter the tax on line 4.
Line 5
If you used Schedule J to figure your tax
for:
• 2022 (that is, you entered the
amount from the 2022 Schedule J,
line 23, on your 2022 Form 1040,
1040-SR, or Form 1040-NR, line 16; or
on your 2022 Form 1040-X, line 6), enter on line 5 the amount from your 2022
Schedule J, line 11;
• 2021 but not 2022, enter on line 5
the amount from your 2021 Schedule J,
line 15; or
• 2020 but not 2021 or 2022, enter
on line 5 the amount from your 2020
Schedule J, line 3.
If you figured your tax for 2020,
2021, and 2022 without using Schedule J, enter on line 5 the taxable income
from your 2020 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
2020 Taxable Income Worksheet to figure the amount to enter on line 5.
If you didn't file a tax return for
2020, use the amount you would have
2020 Taxable Income Worksheet—Line 5
Keep for Your Records
Complete this worksheet if you didn’t use Schedule J to figure your tax for 2021 and 2022 and your 2020 taxable income was zero or
less. See the instructions for line 5 before completing this worksheet.
1. Figure the taxable income from your 2020 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2020, don't include any NOL carryovers or carrybacks to 2020. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2020 Schedule D, line 21, add that loss (as a positive
amount) and your 2020 capital loss carryover to 2021. Subtract from that sum the
amount of the loss on your 2020 Schedule D, line 16, and enter the result . . . . . . . .
2.
3. If you had an NOL for 2020, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2020
that weren't used in 2020 and were carried to years after 2020 . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TREASURY/IRS
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5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 . . . . . . . . . . . . . . .
reported as your taxable income had you
been required to file a tax return. Be
sure to keep all your records for 2020
for at least 3 years after April 15, 2024
(or the date you file your 2023 tax return, if later).
Instructions for 2020 Taxable
Income Worksheet
Line 2. Any net capital loss deduction
on your 2020 Schedule D, line 21, isn't
allowed for income averaging purposes
to the extent it didn't reduce your capital
loss carryover to 2021. This could happen if the taxable income—shown on
your 2020 Form 1040, line 15, or your
2020 Form 1040-NR, line 15 (or as previously adjusted)—was less than zero.
Enter on line 2 the amount by which
your 2020 capital loss carryover to 2021
(the sum of your short- and long-term
capital loss carryovers) exceeds the excess of the loss on your 2020 Schedule D, line 16, over the loss on your
2020 Schedule D, line 21. If you had
any net operating loss (NOL) carrybacks
to 2020, be sure you refigured your 2020
capital loss carryover to 2021.
Line 3. If you had an NOL for 2020,
enter the amount of that NOL from the
2020 Form 1045, Schedule A, line 24,
you filed with Form 1045 or Form
1040X. If you didn't have an NOL for
2020, enter the portion, if any, of the
NOL carryovers and carrybacks to 2020
that weren't used in 2020 and were carried to years after 2020.
Example. A farmer, who is single,
didn't use income averaging for 2020,
2021, or 2022. For 2023, the farmer has
$18,000 of elected farm income on
Schedule J, line 2a. The taxable income
on the farmer’s 2020 Form 1040,
line 15, is $850. However, the farmer
had a $14,700 NOL for 2021, $9,000 of
which was remaining to carry to 2020
after the NOL was carried back to 2019.
To complete line 1 of the 2020 Taxable
Income Worksheet, the farmer combines
the $9,000 NOL deduction with the
$850 from the farmer’s 2020 Form
1040, line 15. The result is a negative
$8,150, the farmer’s 2020 taxable income, which the farmer enters as a positive amount on line 1 of the 2020 Taxable Income Worksheet.
When the farmer filed the 2020 tax
return, the farmer had a $3,000 net capital loss deduction on Schedule D, line 21
(which was also entered on Form 1040,
line 7); a $7,000 loss on Schedule D,
line 16; and a $4,000 capital loss carryover to 2021. However, when the farmer
carried back the 2021 NOL ($9,000 of
which was carried to 2020), the farmer
refigured the 2020 capital loss carryover
to 2021 as $7,000. The farmer adds the
$3,000 from Schedule D, line 21, and
the $7,000 capital loss carryover. The
farmer subtracts from the $10,000 result
the $7,000 loss on the Schedule D,
line 16, and enters $3,000 on line 2 of
the worksheet.
The farmer had $850 of taxable income in 2020 that reduced the 2021
NOL carryback. The $3,000 net capital
J-3
1.
4.
5.
loss deduction reduced the amount of
the 2021 NOL carryback. As a result,
only $5,150 ($9,000 – $850 – $3,000 =
$5,150) was available to carry to 2022
and later years, as shown on the farmer’s
2021 Form 1045, Schedule B, line 10.
The farmer enters the $5,150 on line 3
of the worksheet, and $8,150 ($5,150
plus the $3,000 line 2 amount) on line 4.
The farmer then subtracts the $8,150
from the $8,150 on line 1 and enters the
result, $0, on line 5 of the worksheet.
The farmer enters a $0 on Schedule J,
line 5. The farmer combines that amount
with the $6,000 on Schedule J, line 6,
and enters $6,000 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 2020 Tax Rate Schedules below;
• The 2020 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2020 Schedule D Tax Worksheet in the 2020 Schedule D instructions (but use the 2020 Tax Rate Schedules below when figuring the tax on
lines 34 and 36 of the Schedule D Tax
Worksheet); or
• The 2020 Foreign Earned Income
Tax Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2020
Schedule D Tax Worksheet to figure the
tax on the amount on line 7. However, if
you filed Form 2555 for 2020, you must
first complete the 2020 Foreign Earned
Income Tax Worksheet, and then use the
2020 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
2020. If for 2020 you had a capital loss
that resulted in a capital loss carryover
to 2021, don't reduce the elected farm
income allocated to 2020 by any part of
the carryover.
2020 Tax Rate Schedules—Line 8
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Schedule X—Use if your 2020 filing status was Single.
If
Schedule J,
line 7, is:
Over—
But not
over—
Enter on
Schedule J,
line 8
$0
$9,875
...........
9,875
40,125
$987.50
40,125
85,525
Schedule Y-2—Use if your 2020 filing status was Married filing separately.
of the
amount
over—
If
Schedule J,
line 7, is:
Over—
But
not
over—
Enter on
Schedule J,
line 8
10%
$0
$0 $9,875
...........
+
12%
9,875
9,875 40,125
$987.50
4,617.50
+
22%
40,125
40,125 85,525
85,525 163,300
14,605.50
+
24%
85,525
163,300 207,350
33,271.50
+
32%
207,350 518,400
47,376.50
+
518,400 .............
156,235.00 +
10%
$0
+
12%
9,875
4,617.50
+
22%
40,125
85,525 163,300
14,605.50
+
24%
85,525
163,300
163,300 207,350
33,271.50
+
32%
163,300
35%
207,350
207,350 311,025
47,367.50
+
35%
207,350
37%
518,400
311,025
83,653.75
+
37%
311,025
Schedule Y-1—Use if your 2020 filing status was Married
filing jointly or Qualifying widow(er).
If
Schedule J,
line 7, is:
Over—
But not
over—
$0 $19,750
19,750
80,250
Enter on
Schedule J,
line 8
...........
of the amount
over—
..........
Schedule Z—Use if your 2020 filing status was Head of household.
of the
amount
over—
If
Schedule J,
line 7, is:
Over—
But
not
over—
10%
$0
$0 $14,100
19,750
14,100 53,700
$1,975.00
+
12%
Enter on
Schedule J,
line 8
...........
of the amount
over—
10%
$0
$1,410.00
+
12%
14,100
80,250 171,050
9,235.00
+
22%
80,250
53,700 85,500
6,162.00
+
22%
53,700
171,050 326,600
29,211.00
+
24%
171,050
85,500 163,300
13,158.00
+
24%
85,500
326,600 414,700
66,543.00
+
32%
326,600
163,300 207,350
31,830.00
+
32%
163,300
414,700 622,050
94,735.00
+
35%
414,700
207,350 518,400
45,926.00
+
35%
207,350
622,050 ............
167,307.50 +
37%
622,050
518,400 ...........
154,793.50
+
37%
518,400
J-4
2020 Qualified Dividends and Capital Gain Tax Worksheet—Line 8
Keep for Your Records
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2023 Schedule J, line 2a, doesn't include any net capital gain.
• You (a) entered qualified dividends on your 2020 Form 1040, line 3a, or 2020 Form 1040-NR, line 3a; (b) entered capital gain distributions
directly on your 2020 Form 1040, line 7, or your 2020 Form 1040-NR, line 7, and weren't required to file Schedule D; or (c) filed Schedule D in
2020 and you answered “Yes” on lines 17 and 20 of that Schedule D.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
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Amount from your 2023 Schedule J, line 7. If for 2020 you filed Form 2555, enter the
amount from line 3 of the 2020 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . . 1.
Amount from your 2020 Form 1040, line 3a* (or your 2020 Form
1040-NR, line 3a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2020?*
Enter the smaller of line 15 or 16 of your 2020
Yes. Schedule D, but don't enter less than -0-.
. . . . 3.
.
Enter the amount from your 2020 Form 1040,
No. line 7, or 2020 Form 1040-NR, line 7.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
Amount, if any, from your 2019 Form 4952, line 4g . . . . . . . . . . . . . . 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.
• $40,000 if single or married filing separately.
. . . . . . . . . . 8.
• $80,000 if married filing jointly or qualifying widow(er).
• $53,600 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.
• $441,450 if single.
. . . . . . . . . . 15.
• $248,300 if married filing separately.
• $496,600 if married filing jointly or qualifying widow(er).
• $469,050 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 2020 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2020 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2023 Schedule J, line 8. If for 2020 you filed Form
2555, don't enter this amount on Schedule J, line 8. Instead, enter it on line 4 of the 2020 Foreign Earned Income Tax
Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
* If for 2020 you filed Form 2555, see the footnote in the 2020 Foreign Earned Income Tax Worksheet before completing this line.
J-5
2020 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 2020 Form 1040 using
Form 2555. However, if Schedule J, line 7, is zero or less, don't complete this worksheet.
1. Enter the amount from your 2023 Schedule J, line 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.
2a. Enter the amount from your (and your spouse's, if filing jointly) 2020 Form 2555, lines 45 and
50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2a.
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2020
because they were related to excluded income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . b.
c. Subtract line 2b from line 2a. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . c.
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3. Add lines 1 and 2c . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.
4. Figure the tax on the amount on line 3. Use the 2020 Tax Rate Schedules, the 2020 Qualified
Dividends and Capital Gain Tax Worksheet,* or the 2020 Schedule D Tax Worksheet in the 2020
Schedule D instructions,* whichever applies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Figure the tax on the amount on line 2c. Use the 2020 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 2023 Schedule J, line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.
* Enter the amount from line 3 above on line 1 of the 2020 Qualified Dividends and Capital Gain Tax Worksheet or the 2020 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 2023 Schedule J, line 7, from line 6 of your 2020 Qualified Dividends and Capital Gain Tax Worksheet (line 10
of your 2020 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 2020 Qualified Dividends and Capital Gain Tax Worksheet or 2020 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 2020 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2020 Qualified Dividends and Capital Gain Tax
Worksheet or line 9 of your 2020 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 2020 Qualified Dividends and Capital Gain Tax
Worksheet or line 6 of your 2020 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 2020 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 2020 Unrecaptured Section 1250 Gain Worksheet in the 2020 Instructions for
Schedule D (Form 1040).
J-6
Line 9
If you used Schedule J to figure your tax
for:
• 2022 (that is, you entered the
amount from the 2022 Schedule J,
line 23, on your 2022 Form 1040,
1040-SR, or Form 1040-NR, line 16; or
2022 Form 1040-X, line 6), enter on
line 9 the amount from your 2022
Schedule J, line 15; or
• 2021 but not 2022, enter on line 9
the amount from your 2021 Schedule J,
line 3.
loss carryover to 2022. This could happen if the taxable income—shown on
your 2021 Form 1040, 1040-SR, or
Form 1040-NR, line 15 (or as previously
adjusted)—was less than zero. Enter on
line 2 the amount by which your 2021
capital loss carryover to 2022 (the sum
of your short- and long-term capital loss
carryovers) exceeds the excess of the
loss on your 2021 Schedule D, line 16,
over the loss on your 2021 Schedule D,
line 21. If you had any NOL carrybacks
to 2021, be sure you refigured your 2021
capital loss carryover to 2022.
Line 3. If you had an NOL for 2021,
enter the amount of that NOL from the
2021 Form 1045, Schedule A, line 24,
you filed with Form 1045 or Form
1040-X. If you didn't have an NOL for
2021, enter the portion, if any, of the
NOL carryovers and carrybacks to 2021
that weren't used in 2021 and were carried to years after 2021.
tal loss deduction on Schedule D, line 21
(which was also entered on Form 1040,
line 7), and a $7,000 loss on Schedule D, line 16 (as adjusted). The farmer
also had a $7,000 capital loss carryover
to 2022.
The farmer adds the $3,000 from
Schedule D, line 21, and the $7,000 capital loss carryover. The farmer subtracts
from the $10,000 result the $7,000 loss
on the Schedule D, line 16, and enters
$3,000 on line 2 of the worksheet.
The farmer enters $14,500 on line 3
of the worksheet, the 2021 NOL from
their 2021 Form 1045, Schedule A,
line 24. Of the $29,900 negative taxable
income, the $0 deduction for the suspended exemptions, the $3,000 capital loss
deduction, and the farmer’s $12,400
standard deduction weren’t allowed in
figuring the NOL. The farmer had a
$14,500 loss on the 2021 Schedule F, the
only other item on the farmer’s 2021 tax
return.
The farmer enters $17,500 (the
$3,000 line 2 amount plus the $14,500
line 3 amount) on line 4 and $12,400
(the $29,900 line 1 amount minus the
$17,500 line 4 amount) on line 5. The
farmer enters $12,400 as a negative
amount on Schedule J, line 9. The farmer enters $6,000 on Schedule J, line 10,
and a negative $6,200 on Schedule J,
line 11. If the farmer uses Schedule J to
figure their tax for 2024, the farmer will
enter the negative $6,200 amount on
their 2024 Schedule J as the farmer’s
2021 taxable income for income averaging purposes.
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If you figured your tax for both 2021
and 2022 without using Schedule J, enter on line 9 the taxable income from
your 2021 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
2021, 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 2021
until at least 3 years after April 15, 2024
(or the date you file your 2023 tax return, if later).
Instructions for 2021 Taxable
Income Worksheet
Line 2. Any net capital loss deduction
on your 2021 Schedule D, line 21, isn't
allowed for income averaging purposes
to the extent it didn't reduce your capital
Example. The farmer didn't use income averaging for 2020, 2021, or 2022.
The taxable income on the farmer’s
2021 Form 1040, line 15, is a negative
$29,900. The deduction for exemptions
has been suspended. The farmer subtracts from the $29,900 loss the $0 deduction for the suspended exemptions.
The result is a negative $29,900, the
farmer’s 2021 taxable income, which the
farmer enters as a positive amount on
line 1 of the 2021 Taxable Income
Worksheet.
When the farmer filed their 2021 tax
return, the farmer had a $3,000 net capi-
J-7
2021 Taxable Income Worksheet—Line 9
Keep for Your Records
Complete this worksheet if you didn’t use Schedule J to figure your tax for 2022 and your 2021 taxable income was zero or less. See
the instructions above before completing this worksheet.
1. Figure the taxable income from your 2021 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2021, don't include any NOL carryovers or carrybacks to 2021. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2021 Schedule D, line 21, add that loss (as a positive
amount) and your 2021 capital loss carryover to 2022. Subtract from that sum the
amount of the loss on your 2021 Schedule D, line 16, and enter the result . . . . . . . .
2.
3. If you had an NOL for 2021, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2021
that weren't used in 2021 and were carried to years after 2021 . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 . . . . . . . . . . . . . . .
J-8
1.
4.
5.
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 2021 Tax Rate Schedules below;
• The 2021 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2021 Schedule D Tax Worksheet in the 2021 Schedule D instructions (but use the 2021 Tax Rate Schedules below when figuring the tax on the
Schedule D Tax Worksheet, lines 42 and
44); or
• The 2021 Foreign Earned Income
Tax Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2021
Schedule D Tax Worksheet to figure the
tax on the amount on line 11. However,
if you filed Form 2555 for 2021, you
must first complete the 2021 Foreign
Earned Income Tax Worksheet, and then
use the 2021 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
2021. If for 2021 you had a capital loss
that resulted in a capital loss carryover
to 2022, don't reduce the elected farm
income allocated to 2021 by any part of
the carryover.
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2021 Tax Rate Schedules—Line 12
Schedule X—Use if your 2021 filing status was Single.
If
Schedule J,
line 11, is: But not
Over—
over—
Enter on
Schedule J,
line 12
Schedule Y-2—Use if your 2021 filing status was Married filing separately.
of the
amount
over—
If
Schedule J,
line 11, is:
Over—
But not
over—
Enter on
Schedule J,
line 12
of the amount
over—
$0 $9,950
...........
10%
$0
$0
$9,950
...........
10%
$0
9,950 40,525
$995.00
+
12%
9,950
9,950
40,525
$995.00
+
12%
9,950
40,525 86,375
4,664.00
+
22%
40,525
40,525
86,375
4,664.00
+
22%
40,525
86,375 164,925
14,751.00
+
24%
86,375
86,375 164,925
14,751.00
+
24%
86,375
164,925 209,425
33,603.00
+
32%
164,925
164,925 209,425
33,603.00
+
32%
164,925
209,425 523,600
47,843.00
+
35%
209,425
209,425 314,150
47,843.00
+
35%
209,425
523,600 .............
157,804.25 +
37%
523,600
314,150
84,496.75
+
37%
314,150
Schedule Y-1—Use if your 2021 filing status was Married
filing jointly or Qualifying widow(er).
If
Schedule J,
line 11, is: But not
Over—
over—
$0 $19,900
Enter on
Schedule J,
line 12
...........
..........
Schedule Z—Use if your 2021 filing status was Head of household.
of the
amount
over—
10%
$0
If
Schedule J,
line 11, is:
Over—
But not
over—
$0 $14,200
Enter on
Schedule J,
line 12
...........
of the amount
over—
10%
$0
19,900 81,050
$1,990.00
+
12%
19,900
14,200
54,200
$1,420.00
+
12%
14,200
81,050 172,750
9,328.00
+
22%
81,050
54,200
86,350
6,220.00
+
22%
54,200
172,750 329,850
29,502.00
+
24%
172,750
86,350 164,900
13,293.00
+
24%
86,350
329,850 418,850
67,206.00
+
32%
329,850
164,900 209,400
32,145.00
+
32%
164,900
418,850 628,300
95,686.00
+
35%
418,850
209,400 523,600
46,385.00
+
35%
209,400
628,300 ............
168,993.50 +
37%
628,300
523,600
156,355.00
+
37%
523,600
J-9
...........
Keep for Your Records
2021 Qualified Dividends and Capital Gain Tax Worksheet—Line 12
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2023 Schedule J, line 2a, doesn't include any net capital gain.
• You (a) entered qualified dividends on your 2021 Form 1040, 1040-SR, or 1040-NR, line 3a; (b) entered capital gain distributions directly on
your 2021 Form 1040, 1040-SR, or 1040-NR, line 7, and weren't required to file Schedule D; or (c) filed Schedule D in 2021 and you answered
“Yes” on lines 17 and 20 of that Schedule D.
1.
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4.
Amount from your 2023 Schedule J, line 11. If for 2021 you filed Form 2555, enter the
amount from line 3 of the 2021 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . .
Amount from your 2021 Form 1040, 1040-SR, or 1040-NR,
line 3a* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2021?*
Enter the smaller of line 15 or 16 of your 2021
Yes. Schedule D, but don't enter less than -0-.
. . . . . 3.
Enter the amount from your 2021 Form 1040,
No. 1040-SR, or 1040-NR, line 7.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5.
Amount, if any, from your 2021 Form 4952, line 4g . . . . . . . . . . .
2.
3.
6.
5.
Subtract line 5 from line 4. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.
Subtract line 6 from line 1. If zero or less, enter -0- . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.
9.
10.
11.
12.
13.
14.
15.
1.
6.
7.
Enter one of the following three amounts depending on your
filing status.
• $40,400 if single or married filing separately.
. . . . . . . . . . . 8.
• $80,800 if married filing jointly or qualifying widow(er).
• $54,100 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.
• $445,850 if single.
. . . . . . . . . . . 15.
• $250,800 if married filing separately.
• $501,600 if married filing jointly or qualifying widow(er).
• $473,750 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 2021 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2021 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2023 Schedule J, line 12. If for 2021 you filed Form
2555, don't enter this amount on Schedule J, line 12. Instead, enter it on line 4 of the 2021 Foreign Earned Income
Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
* If for 2021 you filed Form 2555, see the footnote in the 2021 Foreign Earned Income Tax Worksheet before completing this line.
J-10
2021 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 2021 Form 1040 or
1040-SR using Form 2555. However, if Schedule J, line 11, is zero or less, don't complete this worksheet.
1. Enter the amount from your 2023 Schedule J, line 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a. Enter the amount from your (and your spouse's, if filing jointly) 2021 Form 2555, lines 45 and
50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2021
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 2021 Tax Rate Schedules, the 2021 Qualified
Dividends and Capital Gain Tax Worksheet,* or the 2021 Schedule D Tax Worksheet in the 2021
Schedule D instructions,* whichever applies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Figure the tax on the amount on line 2c. Use the 2021 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 2023 Schedule J, line 12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
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2a.
b.
c.
3.
4.
5.
6.
* Enter the amount from line 3 above on line 1 of the 2021 Qualified Dividends and Capital Gain Tax Worksheet or the 2021 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 2023 Schedule J, line 11, from line 6 of your 2021 Qualified Dividends and Capital Gain Tax Worksheet (line 10
of your 2021 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 2021 Qualified Dividends and Capital Gain Tax Worksheet or 2021 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 2021 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2021 Qualified Dividends and Capital Gain Tax
Worksheet or line 9 of your 2021 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 2021 Qualified Dividends and Capital Gain Tax
Worksheet or line 6 of your 2021 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 2021 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 2021 Unrecaptured Section 1250 Gain Worksheet in the 2021 Instructions for
Schedule D (Form 1040).
J-11
Line 13
If you used Schedule J to figure your tax
for 2022 (that is, you entered the amount
from the 2022 Schedule J, line 23, on
your 2022 Form 1040, 1040-SR, or
1040-NR, line 16; or on Form 1040-X,
line 6, for 2022), enter on line 13 the
amount from your 2022 Schedule J,
line 3.
If you didn't use Schedule J to figure
your tax for 2022, enter on line 13 the
taxable income from your 2022 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
2022, 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 2022
until at least 3 years after April 15, 2024
(or the date you file your 2023 tax return, if later).
if you could have entered a negative
amount on that line. Enter on line 2 the
amount by which your 2022 capital loss
carryover to 2023 (the sum of your
short- and long-term capital loss carryovers) exceeds the excess of the loss on
your 2022 Schedule D, line 16, over the
loss on your 2022 Schedule D, line 21.
Line 3. If you had an NOL for 2022,
enter the amount of that NOL from the
2022 Form 1045, Schedule A, line 24,
you filed with Form 1045 or Form
1040-X. If you didn't have an NOL for
2022, enter the portion, if any, of the
NOL carryovers and carrybacks to 2022
that weren't used in 2022 and were carried to years after 2022.
tal loss deduction on Schedule D, line 21
(which was also entered on Form 1040,
line 7); a $7,000 loss on Schedule D,
line 16; and a $5,000 capital loss carryover to 2023 (the farmer’s 2022 capital
loss carryover to 2023 was $5,000, not
$4,000, because the amount on the Form
1040, line 15, would have been a negative $1,000 if the farmer could have entered a negative number on that line).
The farmer adds the $3,000 from Schedule D, line 21, and the $5,000 carryover.
The farmer subtracts from the $8,000 result the $7,000 loss on the Schedule D,
line 16, and enters $1,000 on line 2 of
the worksheet.
The farmer enters -0- on line 3 of the
worksheet because the farmer doesn't
have an NOL for 2022 and didn't have
an NOL carryover from 2022 available
to carry to 2023 and later years. The
NOL deduction for 2022 of $5,150 was
reduced to zero because it didn't exceed
the farmer’s modified taxable income of
$7,150. 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 $4,150. The farmer enters
$1,000 on line 4 and $0 on line 5 of the
worksheet. The farmer enters $0 on
Schedule J, line 13. The farmer enters
$6,000 on Schedule J, line 14, and
$6,000 on Schedule J, line 15. If the
farmer uses Schedule J to figure the
farmer’s tax for 2024, the farmer will
enter $6,000 on the farmer’s 2024
Schedule J as the 2022 taxable income
for income averaging purposes.
TREASURY/IRS
AND OMB USE
ONLY DRAFT
October 6, 2023
Instructions for 2022 Taxable
Income Worksheet
Line 2. Any net capital loss deduction
on your 2022 Schedule D, line 21, isn't
allowed for income averaging purposes
to the extent it didn't reduce your capital
loss carryover to 2023. This could happen if the taxable income—shown on
your 2022 Form 1040, 1040-SR, or
1040-NR, line 15 (or as previously adjusted)—would have been less than zero
Example. The farmer didn't use income averaging for 2020, 2021, or 2022.
The taxable income on the farmer’s
2022 Form 1040, line 15, would have
been a negative $1,000 if the farmer
could have entered a negative number
on that line. This amount includes an
NOL deduction on the farmer’s 2022
Schedule 1 (Form 1040), line 8a, of
$5,150. The $5,150 is the portion of the
2021 NOL that was remaining from
2020 to be carried to 2022. See the examples earlier. The farmer’s taxable income is limited to zero and the farmer
doesn’t have an NOL for 2022. The result is a negative $1,000, the farmer’s
2022 taxable income, which the farmer
enters as a positive amount on line 1 of
the 2022 Taxable Income Worksheet.
When the farmer filed the 2022 tax
return, the farmer had a $3,000 net capi-
2022 Taxable Income Worksheet—Line 13
Keep for Your Records
Complete this worksheet if your 2022 taxable income was zero or less. See the instructions above before completing this worksheet.
1. Figure the taxable income from your 2022 tax return (or as previously adjusted) without limiting it to
zero. If you had an NOL for 2022, don't include any NOL carryovers or carrybacks to 2022. Enter the
result as a positive amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. If there is a loss on your 2022 Schedule D, line 21, add that loss (as a positive
amount) and your 2022 capital loss carryover to 2023. Subtract from that sum the
amount of the loss on your 2022 Schedule D, line 16, and enter the result . . . . . . . .
2.
3. If you had an NOL for 2022, enter it as a positive amount. Otherwise, enter as a
positive amount the portion, if any, of the NOL carryovers and carrybacks to 2022
that weren't used in 2022 and were carried to years after 2022 . . . . . . . . . . . . . . . . .
3.
4. Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 . . . . . . . . . . . . . .
J-12
1.
4.
5.
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 2022 Tax Rate Schedules below;
• The 2022 Qualified Dividends and
Capital Gain Tax Worksheet, later;
• The 2022 Schedule D Tax Worksheet in the 2022 Schedule D instructions (but use the 2022 Tax Rate Schedules when figuring the tax on the Sched-
ule D Tax Worksheet, lines 44 and 46);
or
• The 2022 Foreign Earned Income
Tax Worksheet, later.
If your elected farm income includes
net capital gain, you must use the 2022
Schedule D Tax Worksheet to figure the
tax on the amount on line 15. However,
if you filed Form 2555 for 2022, you
must first complete the 2022 Foreign
Earned Income Tax Worksheet and then
use the 2022 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
2022. If for 2022 you had a capital loss
that resulted in a capital loss carryover
to 2023, don't reduce the elected farm
income allocated to 2022 by any part of
the carryover.
TREASURY/IRS
AND OMB USE
ONLY DRAFT
October 6, 2023
2022 Tax Rate Schedules—Line 16
Schedule X—Use if your 2022 filing status was Single.
If
Schedule J,
line 15, is:
Over—
But not
over—
$0 $10,275
Enter on
Schedule J,
line 16
...........
Schedule Y-2—Use if your 2022 filing status was Married filing separately.
of the
amount
over—
If
Schedule J,
line 15, is:
Over—
But
not
over—
Enter on
Schedule J,
line 16
10%
$0
$0 $10,275
10%
$0
10,275
41,775
$1,075.50
+
12%
10,275
10,275 41,775
$1,027.50
+
12%
10,275
41,775
89,075
4,807.50
+
22%
41,775
41,775 89,075
4,807.50
+
22%
41,775
89,075 170,050
15,213.50
+
24%
89,075
89,075 170,050
15,213.50
+
24%
89,075
170,050 215,950
34,647.50
+
32%
170,050
170,050 215,950
34,647.50
+
32%
170,050
215,950 539,900
49,335.50
+
35%
215,950
215,950 323,925
49,335.50
+
35%
215,950
539,900 .............
162,718.00 +
37%
539,900
323,925
87,126.75
+
37%
323,925
Schedule Y-1—Use if your 2022 filing status was Married
filing jointly or Qualifying surviving spouse.
If
Schedule J,
line 15, is:
Over—
But not
over—
$0 $20,550
20,550
Enter on
Schedule J,
line 16
...........
..........
...........
of the amount
over—
Schedule Z—Use if your 2022 filing status was Head of household.
of the
amount
over—
If
Schedule J,
line 15, is:
Over—
But
not
over—
10%
$0
$0 $14,650
Enter on
Schedule J,
line 16
...........
of the amount
over—
10%
$0
83,550
$2,055.00
+
12%
20,550
14,650 55,900
$1,465.00
+
12%
14,650
83,550 178,150
9,615.00
+
22%
83,550
55,900 89,050
6,415.00
+
22%
55,900
178,150 340,100
30,427.00
+
24%
178,150
89,050 170,050
13,708.00
+
24%
89,050
340,100 431,900
69,295.00
+
32%
340,100
170,050 215,950
33,148.00
+
32%
170,050
431,900 647,850
98,671.00
+
35%
431,900
215,950 539,900
47,836.00
+
35%
215,950
647,850 ............
174,253.50 +
37%
647,850
539,900 ...........
161,218.50
+
37%
539,900
J-13
Keep for Your Records
2022 Qualified Dividends and Capital Gain Tax Worksheet—Line 16
Use this worksheet only if both of the following apply.
• Your elected farm income on your 2023 Schedule J, line 2a, doesn't include any net capital gain.
• You (a) entered qualified dividends on your 2022 Form 1040, 1040-SR, or 1040-NR, line 3a; (b) entered capital gain distributions directly on
your 2022 Form 1040, 1040-SR, or 1040-NR, line 7, and weren't required to file Schedule D; or (c) filed Schedule D in 2022 and you answered
“Yes” on lines 17 and 20 of that Schedule D.
1.
TREASURY/IRS
AND OMB USE
ONLY DRAFT
October 6, 2023
4.
Amount from your 2023 Schedule J, line 15. If for 2022 you filed Form 2555, enter the
amount from line 3 of the 2022 Foreign Earned Income Tax Worksheet . . . . . . . . . . . . . . .
Amount from your 2022 Form 1040, 1040-SR, or 1040-NR,
line 3a* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
Did you file Schedule D in 2022?*
Enter the smaller of line 15 or 16 of your 2022
Yes. Schedule D, but don't enter less than -0-.
. . . . . 3.
Enter the amount from your 2022 Form 1040,
No. 1040-SR, or 1040-NR, line 7.
Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5.
Amount, if any, from your 2022 Form 4952, line 4g . . . . . . . . . . . . .
2.
3.
1.
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.
• $41,675 if single or married filing separately.
. . . . . . . . . . 8.
• $83,350 if married filing jointly or qualifying surviving spouse.
• $55,800 if head of household.
Enter the smaller of line 1 or line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.
Enter the smaller of line 7 or line 9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.
9.
10.
11.
12.
13.
14.
15.
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.
• $459,750 if single.
. . . . . . . . . . 15.
• $258,600 if married filing separately.
• $517,200 if married filing jointly or qualifying surviving spouse.
• $488,500 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 2022 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24.
25.
Add lines 20, 23, and 24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.
26.
Figure the tax on the amount on line 1. Use the 2022 Tax Rate Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.
27.
Tax. Enter the smaller of line 25 or line 26 here and on your 2023 Schedule J, line 16. If for 2022 you filed Form
2555, don't enter this amount on Schedule J, line 16. Instead, enter it on line 4 of the 2022 Foreign Earned Income
Tax Worksheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27.
* If for 2022 you filed Form 2555, see the footnote in the 2022 Foreign Earned Income Tax Worksheet before completing this line.
J-14
2022 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 2022 Form 1040 or
1040-SR using Form 2555. However, if Schedule J, line 15, is zero or less, don't complete this worksheet.
1. Enter the amount from your 2023 Schedule J, line 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2a. Enter the amount from your (and your spouse's, if filing jointly) 2022 Form 2555, lines 45 and
50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2022
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 2022 Tax Rate Schedules, the 2022 Qualified
Dividends and Capital Gain Tax Worksheet,* or the 2022 Schedule D Tax Worksheet in the 2022
Schedule D instructions,* whichever applies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Figure the tax on the amount on line 2c. Use the 2022 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 2023 Schedule J, line 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.
TREASURY/IRS
AND OMB USE
ONLY DRAFT
October 6, 2023
2a.
b.
c.
3.
4.
5.
6.
* Enter the amount from line 3 above on line 1 of the 2022 Qualified Dividends and Capital Gain Tax Worksheet or the 2022 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 2023 Schedule J, line 15, from line 6 of your 2022 Qualified Dividends and Capital Gain Tax Worksheet (line 10
of your 2022 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 2022 Qualified Dividends and Capital Gain Tax Worksheet or 2022 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 2022 Foreign Earned Income Tax Worksheet above.
1. Reduce (but not below zero) the amount you would otherwise enter on line 3 of your 2022 Qualified Dividends and Capital Gain Tax
Worksheet or line 9 of your 2022 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 2022 Qualified Dividends and Capital Gain Tax
Worksheet or line 6 of your 2022 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 2022 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 2022 Unrecaptured Section 1250 Gain Worksheet in the 2022 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 Form 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-15
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 | 2023 Instructions for Schedule J |
| Subject | 2023 Instructions for Schedule J , Income Averaging for Farmers and Fishermen |
| Author | W:CAR:MP:FP |
| File Modified | 2023-10-06 |
| File Created | 2023-09-28 |