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Tax Trails - Self-Employment Income

If you are engaged in farming and are not an employee, you are usually considered self-employed and may owe self-employment tax on your net earnings.

You report your farm income and expenses on Schedule F (Form 1040) (.pdf), Profit or Loss from Farming. This includes income and expenses you have from a farm partnership shown on Schedule K-1 (Form 1065) (.pdf), Partner's Share of Income, Deductions, Credits, Etc.

Income from farming that you report on Schedule F (Form 1040) includes, but is not limited to, amounts you receive from cultivating the soil, raising or harvesting any agricultural commodities, or managing a farm for gain or profit either as owner or as tenant.

You figure your self-employment tax on Schedule SE (Form 1040) (.pdf), Self-Employment Tax.

If you earn or receive income during the year that is not subject to withholding or you do not have enough tax withheld, you may have to pay estimated tax. If you do not pay enough tax during the year through withholding or by making estimated tax payments, you may have to pay a penalty.

For more information on the tax consequences of farming, refer to Chapter 3, "Farm Income," and Chapter 12, "Self-Employment Tax," of Publication 225, Farmer's Tax Guide. For more information on estimated tax, refer to Chapter 2 of Publication 505, Tax Withholding and Estimated Tax.

 

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Page Last Reviewed or Updated: 01-Jan-2014