What this line means
Your net farm profit or loss from Schedule F, line 34, plus any farm income from partnership Schedule K-1 (Form 1065), box 14, code A. If you operated a farm as a sole proprietor or received farm partnership income, this is where that amount enters the self-employment tax calculation. A farm loss reduces your combined self-employment earnings on line 3.
Does this apply to you?
- You operated a farm and filed Schedule F reporting farm income and expenses
- You received a Schedule K-1 from a farm partnership showing self-employment farm income
- You raised livestock, grew crops, or operated an agricultural business during the tax year
- You received Conservation Reserve Program payments (those go on line 1b instead)
Easy to overlook
Farm partnership K-1 income goes here, not on line 2 Farm self-employment income from a partnership (Schedule K-1, box 14, code A) is reported on line 1a alongside your Schedule F income — not on line 2 with nonfarm business income. Placing farm partnership income on line 2 does not change your total SE tax, but it misclassifies the income and creates problems if you use the farm optional method in Section B. 1 IRS Schedule SE instructions — Line 1a
Net farm losses carry through to reduce total SE earnings If your farm had a net loss on Schedule F, line 34, that loss flows here and reduces your combined earnings on line 3. A large enough farm loss can offset nonfarm self-employment income and reduce your SE tax. But if combined earnings on line 4c fall below $400, you owe no SE tax — and you do not earn Social Security credits for the year. 2 IRS Schedule F instructions — Line 34
Watch out for this
Entering gross farm income instead of net farm profit. Line 1a uses the bottom-line number from Schedule F, line 34 — total income minus total deductions. Entering gross farm income (Schedule F, line 9) here dramatically overstates your self-employment earnings and inflates your SE tax.
Footnotes
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IRS Schedule SE (Form 1040) Instructions, Line 1a. https://www.irs.gov/instructions/i1040sse ↩
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IRS Schedule F (Form 1040) Instructions, Line 34. https://www.irs.gov/instructions/i1040sf ↩