Fill out Schedule J (Income Averaging for Farmers and Fishermen) online
Schedule J allows farmers and fishermen to average their current year income over the three prior tax years. This can significantly reduce taxes in a high-income year by applying the lower marginal rates from previous years when income may have been lower.
How to fill out Schedule J (Income Averaging for Farmers and Fishermen)
Determine your elected farm income
Calculate the amount of your current year taxable income that is attributable to farming or fishing. You may elect all or part of this income for averaging purposes.
Gather prior year tax information
Obtain your taxable income, filing status, and tax from each of the three prior tax years. You will need these figures to compute the averaged tax for each base year.
Allocate elected farm income to base years
Divide one-third of your elected farm income and add it to the taxable income of each of the three prior years. Recalculate the tax for each base year with the added income.
Calculate the total averaged tax
Sum the additional tax from each of the three base years to determine the total tax on your elected farm income. Add this to the tax on your remaining (non-elected) current year income for your final tax liability.
About Schedule J (Income Averaging for Farmers and Fishermen)
Who needs this form
Individuals with income from farming or fishing who have a year of significantly higher income than the prior three years. The election is available to sole proprietors, partners, and S corporation shareholders who receive farm or fishing income.
Where to submit
Attach Schedule J to your Form 1040 when filing. The tax calculated on Schedule J replaces the tax calculated on the standard tax computation worksheet.
Source and content freshness
- Reviewed: 2026-02-24
- Check the latest official form instructions for the filing year that applies to you.
- Filing deadlines may shift for weekends and holidays. Verify due dates with official instructions.
Common mistakes to avoid
- Using income averaging in a year when it does not produce a tax benefit (always compare to the regular tax)
- Not having the prior three years of tax returns available to complete the calculations
- Including non-farm income in the elected farm income amount
- Forgetting that the election can be revoked within the time allowed if circumstances change
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Is income averaging only for farmers?
Income averaging under Schedule J is available to both farmers and fishermen. It applies to individuals with income from farming (reported on Schedule F or received as a partner/S corporation shareholder) or from fishing activities. Other types of income do not qualify for this averaging method.
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