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Category: Wisconsin

Wisconsin Addition to Income - Farm Losses

An Addition to Income may be required if farm losses were deducted on your federal tax return and you were NOT actively engaged (explained later) in the farming operations that produced those losses AND your nonfarm Wisconsin adjusted gross income is more than $55,000 ($27,500 if married filing separately).

To figure your combined net losses from farming operations, add together any losses you have from farming oeprations in which you were not actively engaged (for example, these could be losses from a farm partnership or tax-option (S) corporation reported on Federal Schedule E).  Do not reduce these losses by any net farm gains.  If the total of these losses is more than the maximum allowable loss shown in the tables below, enter the excess as an addition to income.

EXAMPLE: A single taxpayer reports a loss of $25,000 from a farm partnership (the taxpayer is not actively engaged in this farming operation), and a profit of $5,000 from the rental of farmland.  The taxpayer's nonfarm Wisconsin adjusted gross income is $60,000.  Therefore, only $20,000 of the $25,000 farm loss may be deducted.  The taxpayer would enter $5,000 as an addition to income for Farm Losses.

Farm Loss Limits –
Single persons and Married persons filing JOINT return

Nonfarm Wisconsin Adjusted Gross Income:
More Than                                           But Not More Than                    Maximum Allowable Loss

$        0................................................ $ 55,000................................... Full Amount

  55,000................................................   75,000................................... $  20,000

  75,000................................................ 100,000...................................     17,500

100,000................................................ 150,000...................................     15,000

150,000................................................ 200,000...................................     12,500

200,000................................................ 250,000...................................     10,000

250,000................................................ 300,000...................................       7,500

300,000................................................ 600,000...................................       5,000

600,000................................................................................................ No Loss 

 

Farm Loss Limits –
Married persons filing SEPARATE returns
(including married filing as Head of Household)

Nonfarm Wisconsin Adjusted Gross Income:
More Than                                          But Not More Than                      Maximum Allowable Loss

$        0................................................ $ 27,500................................... Full Amount

  27,500................................................   37,500................................... $  10,000

  37,500................................................   50,000...................................       8,750

  50,000................................................   75,000...................................       7,500

  75,000................................................  100,000...................................      6,250

100,000................................................  125,000...................................      5,000

125,000................................................  150,000...................................      3,750

150,000................................................  300,000...................................      2,500

300,000................................................................................................ No Loss 

 

To be "actively engaged in farming" with respect to a farming operation, you must make a significant contribution of:

  1. capital, equipment, or land, or a combination of capital, equipment, or land; and
  2. active personal labor or active personal management, or a combination of both.

Factors you must take into consideration in determining if you contribute a significant amount of active personal labor or activer personal managment include:

  • The type of crops and livestock produced;
  • The normal and customary farming practices of the area; and
  • The total amount of labor and management which is necessary for such a farming operation in the area.

In order to be considered to be actively engaged in a farming operation, you must have:

  1. a share of the profits or losses fromt he farming operation which is commesurate with your contributions to the operation, and
  2. contributions to the farming operation which are at risk.