What is the difference between business income and farm income?

[Carl]

Business income (SCH C) is earned income. Farm income that is farm rental income is passive income (SCH F).

[Critter-3 · Accepted solution]

Farm and Farm Rental Income
Farm Income is the money you made while managing or operating a farm, whether you owned it or rented it. Farms include plantations, ranches, ranges or orchards. You can make money from raising or growing things like stock, dairy, poultry, fish or fruit.

Farm income also includes money you made from crop shares you got when you materially participated in producing the crop. This income is included in self-employment income.

If you did not materially participate in running the farm, the crop shares you got as rent are farm rental income. This income is not considered self-employment income.

You can use farm income averaging if your role on the farm was as an individual, a partner in a partnership, or a shareholder in an S corporation.

What paperwork do I need?

- Schedule F, Profit or Loss from Farming
- Form 4835, Farm Rental Income and Expenses
- Schedule J, Farm Income Averaging
- Form 943, Employer's Annual Federal Tax Return for Agricultural Employees
- Form 990C, Farmer's Cooperative Association

More Information

- IRS Publication 225 - Farmer's Tax Guide
- IRS Publication 51, Circular A - Agricultural Employer's Tax Guide
These publications are not included in this TurboTax product, you may request a copy.