Department of the Treasury

Internal Revenue Service

2023 Instructions for Schedule J

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.

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 

applied for Qualifying widow(er) apply 

to Qualifying surviving spouse. We will 

match the term to the year of use 

throughout these instructions.

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 

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.

J-1

Sep 28, 2023 Cat. No. 25514J
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 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;

• 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.

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 

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 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 

TIP

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 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 

J-2
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 

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 

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 ............................................................... 1.

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 ...................................................................... 4.

5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 5 ............... 5.

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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

Schedule X—Use if your 2020 filing status was Single. Schedule Y-2—Use if your 2020 filing status was Married filing separately.

If 

Schedule J, 

line 7, is:

Over—

But not 

over—

Enter on

Schedule J,

line 8 

of the 

amount

 over—

If 

Schedule J, 

line 7, is:

Over—

But 

not 

over—

Enter on

Schedule J,

line 8 of the amount 

over—

 $0 $9,875 ........... 10% $0 $0 $9,875 ........... 10% $0

9,875 40,125 $987.50 + 12% 9,875 9,875 40,125 $987.50 + 12% 9,875

40,125 85,525 4,617.50 + 22% 40,125 40,125 85,525 4,617.50 + 22% 40,125

85,525 163,300 14,605.50 + 24% 85,525 85,525 163,300 14,605.50 + 24% 85,525

163,300 207,350 33,271.50 + 32% 163,300 163,300 207,350 33,271.50 + 32% 163,300

207,350 518,400 47,376.50 + 35% 207,350 207,350 311,025 47,367.50 + 35% 207,350

518,400 ............. 156,235.00 + 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).

Schedule Z—Use if your 2020 filing status was Head of household.

If 

Schedule J, 

line 7, is:

Over—

But not 

over—

Enter on

Schedule J,

line 8 

of the 

amount

 over—

If 

Schedule J, 

line 7, is:

Over—

But 

not 

over—

Enter on

Schedule J,

line 8 of the amount 

over—

$0 $19,750 ........... 10% $0 $0 $14,100 ........... 10% $0

19,750 80,250 $1,975.00 + 12% 19,750 14,100 53,700 $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. 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.

2. Amount from your 2020 Form 1040, line 3a* (or your 2020 Form 

1040-NR, line 3a) ....................................... 2.

3. Did you file Schedule D in 2020?*

Yes. Enter the smaller of line 15 or 16 of your 2020 

Schedule D, but don't enter less than -0-.

.....3.

No. Enter the amount from your 2020 Form 1040, 

line 7, or 2020 Form 1040-NR, line 7.

4. Add lines 2 and 3 ....................................... 4.

5. Amount, if any, from your 2019 Form 4952, line 4g .............. 5.

6. 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.

• $40,000 if single or married filing separately.

• $80,000 if married filing jointly or qualifying widow(er).

• $53,600 if head of household.

.......... 8.

9. Enter the smaller of line 1 or line 8 ......................................... 9.

10. Enter the smaller of line 7 or line 9 ......................................... 10.

11. Subtract line 10 from line 9. This amount is taxed at 0% .......................... 11.

12. Enter the smaller of line 1 or line 6 ......................................... 12.

13. Enter the amount from line 11 ............................................. 13.

14. Subtract line 13 from line 12 .............................................. 14.

15. Enter one of the following amounts depending on your filing status.

• $441,450 if single.

• $248,300 if married filing separately.

• $496,600 if married filing jointly or qualifying widow(er).

• $469,050 if head of household.

.......... 15.

16. 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.

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.

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 

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.

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 capital 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.

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 ............................................................... 1.

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 ...................................................................... 4.

5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 9 ............... 5.

J-8
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.

2021 Tax Rate Schedules—Line 12

Schedule X—Use if your 2021 filing status was Single. Schedule Y-2—Use if your 2021 filing status was Married filing separately.

If 

Schedule J, 

line 11, is:

Over—

But not 

over—

Enter on

Schedule J,

line 12

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).

Schedule Z—Use if your 2021 filing status was Head of household.

If 

Schedule J, 

line 11, is:

Over—

But not 

over—

Enter on

Schedule J,

line 12

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 $19,900 ........... 10% $0 $0 $14,200 ........... 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
2021 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 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. 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 .............. 1.

2. Amount from your 2021 Form 1040, 1040-SR, or 1040-NR, 

line 3a* ........................................... 2.

3. Did you file Schedule D in 2021?*

Yes. Enter the smaller of line 15 or 16 of your 2021 

Schedule D, but don't enter less than -0-.

..... 3.

No. Enter the amount from your 2021 Form 1040, 

1040-SR, or 1040-NR, line 7.

4. Add lines 2 and 3 .................................... 4.

5. Amount, if any, from your 2021 Form 4952, line 4g ........... 5.

6. 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.

• $40,400 if single or married filing separately.

• $80,800 if married filing jointly or qualifying widow(er).

• $54,100 if head of household.

........... 8.

9. Enter the smaller of line 1 or line 8 ........................................ 9.

10. Enter the smaller of line 7 or line 9 ........................................ 10.

11. Subtract line 10 from line 9. This amount is taxed at 0% ......................... 11.

12. Enter the smaller of line 1 or line 6 ........................................ 12.

13. Enter the amount from line 11 ............................................ 13.

14. Subtract line 13 from line 12 ............................................. 14.

15. Enter one of the following amounts depending on your filing status.

• $445,850 if single.

• $250,800 if married filing separately.

• $501,600 if married filing jointly or qualifying widow(er).

• $473,750 if head of household.

........... 15.

16. 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 ........................................ 1.

2a. Enter the amount from your (and your spouse's, if filing jointly) 2021 Form 2555, lines 45 and 

50 ................................................................................... 2a.

b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2021 

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 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 ............................................... 4.

5. Figure the tax on the amount on line 2c. Use the 2021 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 12 ........................................................... 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).

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 

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.

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 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 $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.

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 ............................................................... 1.

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 ...................................................................... 4.

5. Subtract line 4 from line 1. Enter the result as a negative amount on Schedule J, line 13 .............. 5.

J-12
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 Schedule 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.

2022 Tax Rate Schedules—Line 16

Schedule X—Use if your 2022 filing status was Single. Schedule Y-2—Use if your 2022 filing status was Married filing separately.

If 

Schedule J, 

line 15, is:

Over—

But not 

over—

Enter on

Schedule J,

line 16

of the 

amount

 over—

If 

Schedule J, 

line 15, is:

Over—

But 

not 

over—

Enter on

Schedule J,

line 16 of the amount 

over—

 $0 $10,275 ........... 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.

Schedule Z—Use if your 2022 filing status was Head of household.

If 

Schedule J, 

line 15, is:

Over—

But not 

over—

Enter on

Schedule J,

line 16

of the 

amount

 over—

If 

Schedule J, 

line 15, is:

Over—

But 

not 

over—

Enter on

Schedule J,

line 16 of the amount 

over—

$0 $20,550 ........... 10% $0 $0 $14,650 ........... 10% $0

20,550 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
2022 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 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. 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 ............... 1.

2. Amount from your 2022 Form 1040, 1040-SR, or 1040-NR, 

line 3a* ............................................. 2.

3. Did you file Schedule D in 2022?*

Yes. Enter the smaller of line 15 or 16 of your 2022 

Schedule D, but don't enter less than -0-. 

.....

3.

No. Enter the amount from your 2022 Form 1040, 

1040-SR, or 1040-NR, line 7.

4. Add lines 2 and 3 ...................................... 4.

5. Amount, if any, from your 2022 Form 4952, line 4g ............. 5.

6. 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.

• $83,350 if married filing jointly or qualifying surviving spouse.

• $55,800 if head of household.

.......... 8.

9. Enter the smaller of line 1 or line 8 ......................................... 9.

10. Enter the smaller of line 7 or line 9 ......................................... 10.

11. Subtract line 10 from line 9. This amount is taxed at 0% .......................... 11.

12. Enter the smaller of line 1 or line 6 ......................................... 12.

13. Enter the amount from line 11 ............................................. 13.

14. Subtract line 13 from line 12 .............................................. 14.

15. Enter one of the following amounts depending on your filing status.

• $459,750 if single.

• $258,600 if married filing separately.

• $517,200 if married filing jointly or qualifying surviving spouse.

• $488,500 if head of household.

.......... 15.

16. 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 ........................................ 1.

2a. Enter the amount from your (and your spouse's, if filing jointly) 2022 Form 2555, lines 45 and 

50 .................................................................................. 2a.

b. Enter the total amount of any itemized deductions or exclusions you could not claim for 2022 

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 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 ............................................... 4.

5. Figure the tax on the amount on line 2c. Use the 2022 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 16 ........................................................... 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.

If you amended your return or the 

IRS made changes to it, make sure you 

enter the corrected amount.

J-15