Kentucky Schedule J is used to calculate Kentucky Farm Income Averaging. Qualifying farmers and fishermen may be able to reduce their Kentucky tax by averaging certain farm income over the previous three tax years. Because farm income can vary significantly from year to year, income averaging may provide a tax benefit when your current-year farm income is higher than in prior years.
To complete Schedule J, enter your elected farm income and your Kentucky taxable income from 2022, 2023, and 2024. The program will use this information to calculate whether farm income averaging lowers your Kentucky tax.
When Should I Complete Schedule J?
Complete Schedule J if:
- You have elected farm income for the current year.
- You are using the farm income averaging method.
If you are not averaging farm income, select No for Use Schedule J.
Where Do I Enter This in the Program?
Kentucky Return > Schedule J (Farm Income Averaging)
Before You Start
Have the following available:
- Your 2022 Kentucky tax return.
- Your 2023 Kentucky tax return.
- Your 2024 Kentucky tax return.
You will use information from these returns to complete the Kentucky Schedule J calculation.
What Information Do I Need to Enter?
Use Schedule J
Select Yes if you are using Kentucky Farm Income Averaging.
Select No if you are not averaging farm income and do not need Schedule J completed.
2025 Elected Farm Income
Enter the amount of farm income you want to average.
This amount generally cannot exceed the amount reported on Federal Schedule J, line 2(a). The elected farm income is the portion of your current-year farm income that you choose to spread over the prior three tax years for purposes of calculating your Kentucky tax.
2022 Taxable Income
Enter your Kentucky taxable income for tax year 2022.
In most cases, this amount can be found on your 2022 Kentucky Form 740, Line 11. If you previously used Kentucky Schedule J, see your prior-year Schedule J for the correct amount to enter.
2023 Taxable Income
Enter your Kentucky taxable income for tax year 2023.
In most cases, this amount can be found on your 2023 Kentucky Form 740, Line 11. If you previously used Kentucky Schedule J, see your prior-year Schedule J for the correct amount to enter.
2024 Taxable Income
Enter your Kentucky taxable income for tax year 2024.
In most cases, this amount can be found on your 2024 Kentucky Form 740, Line 11. If you previously used Kentucky Schedule J, see your prior-year Schedule J for the correct amount to enter.
Where Do I Find My Prior-Year Taxable Income?
Look at your Kentucky returns for:
- 2022
- 2023
- 2024
If you did not use Kentucky Schedule J in those years, use the taxable income reported on Form 740, Line 11 for each year. If you previously used Kentucky Schedule J, refer to that year's Schedule J to determine the correct amount to enter.
What Happens Next?
The program uses your:
- 2025 elected farm income
- 2022 taxable income
- 2023 taxable income
- 2024 taxable income
to calculate Kentucky Farm Income Averaging. The calculation spreads elected farm income across the previous three years and applies the applicable Kentucky tax rates for those years.
This may reduce your Kentucky tax liability if your 2025 farm income was significantly higher than your income in prior years.
Important
- Kentucky Schedule J is generally used only by qualifying farmers and fishermen.
- If you are not using farm income averaging, select No for Use Schedule J and leave the remaining fields blank.