Q: I inherited a farm for which I have income to report my share of the proceeds from the sale of livestock and coop dist
Do I need to pay self employment tax on this if I don't actually farm the land?
A: If you're not actively participating in the business then no you are not subject to SE tax. Also farms have alternative SE calculations that may come into play. I would suggest hiring a professional to help with this. The Schedule F looks simple enough but there are numerous traps for the unwary.
A: Talk to a tax professional for the specifics. Ideally, the tax professional should also be your tax preparer because selections on how the income is reported directly impacts the need for a self employment taxes.
As a general rule of thumb, if you actively farm OR in any way receive profits based on the production from the land a Schedule SE (self employment) must be filed. Note, this includes sharecropping, partnerships/co-ops/clubs, and (most) contract farming. Another good flag is whether you will be filing a Schedule F (farm income) versus another schedule to report the income/loss (e.g. a Schedule E).
Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.
The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.
Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.