Self-employed Farm Income
Qualified self-employed farm enterprises may deduct losses from other household income. This means you must calculate income from these enterprises differently.
What counts as “self-employed farm income”?
To qualify, the farmer must
- be cultivating or operating a farm for profit as an owner or tenant and
- receive or expect to receive a gross income of $1,000 or more annually from farming.
Farming includes but is not limited to
- fish (artificially fed and cared for – not wild caught),
- truck farms (produces vegetables for the market),
- plant nurseries, and
Farmers use Form 1040, Schedule F. Line 9 on the form shows gross income, and Line 34 shows the net profit or loss from the farm.
When Line 9 is greater than Line 34, it means the farmer earned a profit from the farming enterprise. When profitable, calculate the income as you do for any other self-employment.
When Line 34 shows a loss, you will offset the loss against other household income. Subtract the losses first from any other self-employment income. After this, if there are more losses to offset, subtract the remaining losses from the household’s other earned and unearned income.
When the farmer has a farm loss, do not enter any self-employment income in the Income tab of the FACS Interview Notebook. Use case notes to explain how you offset the farm loss against other income.
Case Note Example: The client is a self-employed farmer. Schedule F shows a yearly loss of -$25,000. $25,000 divided by 12 = a monthly loss of $2083. The household also has monthly earned income of $3500. $3500 monthly earned - $2083 monthly farming loss = $1417 in countable earned income. The worker will code no self-employment income and $1417 earned income on the FACS Interview Notebook Income tab.
Policy on this topic is located at 340:50-7-30.