Schedule K1 Nonfarm optional method

[bmshah1]

I received a schedule K1 for an LLC I'm in partnership with. Box 1 of the K1 shows a loss. Box 14 shows a loss with Code A and a positive value with code C. While entering the K1 in TT it is asking whether I should use the non-farm optional method to calculate self-employment tax? I am not sure what to do here.

This is my second year of receiving K1. In 2022 Box 1 had a negative number. Box 14 had a code A with a negative number and code C with a positive number. I don't remember what I did in 2022 when faced with same question of whether I should use the non-farm optional method. 

Can someone please let me know what I need to do for 2023 for the self employment tax?

[Rick19744 · Accepted solution]

Unless you are a farmer, you can ignore Code C.

Many software programs reflect this automatically.

I wouldn't even input the amount into TT.

[bmshah1]

@Rick19744 I will delete the code C amount. What should I choose for the question asking whether I want to use nonfarm optional method to calculate self employment tax? Should I choose Yes or No.

[PatriciaV]

Unless you are a farmer or file Schedule F, you would answer "no" to the question to use the non-farm method for calculating self-employment taxes. If you are a limited partner, this question doesn't apply to you.

[Rick19744]

@bmshah1 I agree with @PatriciaV in that if TT is looking for a response, then answer "no"; as it does not apply unless you are a farmer.

[AmeliesUncle]

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@bmshah1 wrote:

positive value with code C. While entering the K1 in TT it is asking whether I should use the non-farm optional method to calculate self-employment tax?

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That is NON-farm gross income.  The other comments about being a farmer have nothing to do with this.

In most cases, you don't want to use the optional method.  But there are some circumstances where you may want to, such as (1) you want to build Social Security credits and (2) you have little-or-no "earned income" and want to use the optional method to qualify for the Earned Income Credit and/or the refundable portion of the Child Tax Credit.