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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

  1. be cultivating or operating a farm for profit as an owner or tenant and
  2. receive or expect to receive a gross income of $1,000 or more annually from farming.

Farming includes but is not limited to

    • stock,
    • dairy,
    • poultry,
    • fish (artificially fed and cared for – not wild caught),
    • fruit,
    • truck farms (produces vegetables for the market),
    • plantations,
    • ranches,
    • ranges,
    • plant nurseries, and
    • orchards.

Countable Amount

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.

FACS Coding

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.

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