I rent farm land in a state where I do not reside. I received a 1099-Misc. Do I enter this as Miscellaneous income?

[GeorgeM777]

Do you mean you rent out farm land to another party?  If so, and your 1099-Misc in box 1 includes the rental payments your received, then yes, you would need to report the rental payments as income.  

Generally taxpayers who are independent contractors or self-employed will receive a 1099-Misc with an amount in box 3, Other Income.  This too is income and must be reported on a tax return.  

[Kurt D1]

Yes, I rent the property out to another party.  I also am asked whether I actively participate/manage the farm and whether I have any business expenses, etc.  I am entirely passive, the renter "does all the work".  So do I need any of these additional forms that the program generates concerning this?

[JohnB5677 · Accepted solution]

Farm landlords who are not involved in the farm operation are subject to income tax on their rental income.  The proper way to report it is on Schedule E as the rental income you received.   In addition, you will have the option to deduct any expenses you may have incurred.

[tax2xat]

We are full year residents of CA. We own farmland in CO which we rent out for portion of crop. Do I have to file CO tax on that income?

[DianeW777]

Yes, you must file a tax return in Colorado (CO) on the income received from farmland physically located there. Complete the CO return first, then do your resident return. 

Income tax is prorated so that it is calculated only on income received in Colorado or from sources within Colorado. You will calculate your prorated tax by completing the DR 0104PN.

TurboTax will calculate it for you, watch the screens for an allocation page where you might need to enter the farmland rent.

CO Nonresident Filing Requirements

A nonresident is an individual who did not reside within the boundaries of Colorado at any time during the tax year. However, the person may have temporarily worked in Colorado and/or received income from a source in Colorado. A nonresident is required to file a Colorado income tax return if they:

• are required to file a federal income tax return, and
• had taxable Colorado-sourced income.

Nonresidents will initially determine their Colorado taxable income as though they are full-year residents. Then the tax will be prorated based on only the CO income.

The credit for taxes paid to another state on the same income is used on your resident state because they do not want you to pay taxes twice on the same income.  As the resident state all worldwide income must be included.

The credit for tax paid to another state on the same income will be the lesser of:

1. the tax liability actually charged by the nonresident state, OR
2. the tax liability that would have been charged by your resident state

TurboTax should automatically enter this information if the CO return is done first.  If not, write down the CO tax and the farmland income if you need to enter the information.

[tax2xat]

Yes, but in which state do I file income from the farm...where I reside full time or where the farm is located?

[AmyC]

Both. You file a tax return for the income from the farm where it is located, CO. All income is reported to your resident state, CA, but they will give you a credit so that you are not double taxed. Be sure to do the CO return first to create the liability so the CA return gives you credit.

As a CA resident you are required to report all worldwide income.

@tax2xat