Farm Income Tax Implications
The IRS considers you to be in the business of farming if both of these apply:
- You cultivate, operate, or manage a farm.
- Your goal is to make a profit or gain as either the owner or a tenant.
- Cultivating land
- Dairy farms
- Fruit farms
- Poultry farms
- Fish farms
- Stock farms
- Truck farms
- Selling crop shares
- Breeding and raising fur-bearing animals that aren’t dogs, cats, or other pets
Farm income includes:
- Fair market value (FMV) of property or services received for gain or profit from:
- Cultivating a farm
- Operating a farm
- Managing a farm
- Gain on selling farm products raised for sale or bought for resale.
You use Schedule F (not Schedule C) to figure the profit or loss of your farm.
You’re usually self-employed if you operate your own farm on land you either own or rent. Since you’re self-employed, you get Social Security coverage by:
- Figuring your self-employment tax on Schedule SE
- Paying self-employment tax
Your farm income might fall below a certain level. If so, you can use an alternate method to figure self-employment tax.
Since it’s difficult to predict farm income, the estimated tax rules are different for farmers.
To learn more, see Publication 225: Farmer’s Tax Guide at www.irs.gov.
The first step in how to calculate long-term capital gains tax is generally to find the difference between what you paid for your property and how much you sold it for —adjusting for commissions or fees. Depending on your income level, your capital gain will be taxed federally at either 0%, 15% or 20%.
Are scholarships and grants considered taxable income by the IRS? Learn more from the tax experts at H&R Block.
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