Here's the question I don't understand "Would XXXX like to use the Farm Optional Method to calculate self-employment tax?""
If I click Yes I get a lower amount of refund on Federal but higher on State.
I click No (I get a higher ($775 difference) refund for Federal but a little lower refund ($30) for State, I've researched alot coming up short, only things I'm finding is that "You can use this method if you have income from farming, non-farm income, or a combination of both. You can use the optional method only five times in your life when reporting non-farm income. There is no limit on using the optional method of reporting farm income."
So my questions are, if I can only use this 5 times in my lifetime, when do I know when a "good" time to use it is?
Or do we fall under the no limit on using because it's ALL farm income?
Also why would farm self employment tax be higher then a different self employment profession, meaning if I elect to use the Farm Option method, I get a lower return?
The optional methods are to intentionally INCREASE the amount of Self Employment tax that you pay. The purpose of that is because SOME people are trying to get their 40 quarters (10 years) of profit/earned income to qualify for Social Security. In some cases, intentionally paying more MIGHT slightly increase your Social Security Benefits.
So if you have already had (or will expect to have) at least 10 years of business profit or other earned income (such as a W-2) of $6000 or more, most people would NOT want to do an optional method to pay more tax.
So if you have already had (or will expect to have) at least 35 years of business profit or other earned income (such as a W-2) of $6000 or more, definitely DON'T use the optional method.
The optional methods are to intentionally INCREASE the amount of Self Employment tax that you pay. The purpose of that is because SOME people are trying to get their 40 quarters (10 years) of profit/earned income to qualify for Social Security. In some cases, intentionally paying more MIGHT slightly increase your Social Security Benefits.
So if you have already had (or will expect to have) at least 10 years of business profit or other earned income (such as a W-2) of $6000 or more, most people would NOT want to do an optional method to pay more tax.
So if you have already had (or will expect to have) at least 35 years of business profit or other earned income (such as a W-2) of $6000 or more, definitely DON'T use the optional method.
So if I select "No" to the question "Would XXXX like to use the Farm Optional Method to calculate self-employment tax"does this mean I'm filing the non-farm optional method and "using" one of my 5 times in a lifetime I can use it?
Or since I've already reached my 40 quarters do I just always say NO to this question?