Schedule F vs Form 4835

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My mom is a retired school teacher who farms. A tax preparer told her she should move all of the items she previously reported on Schedule F to Form 4835, even though she does not lease the land or livestock to anyone. The tax preparer said to do this because my mom has never been nor would ever be eligible for social security benefits, given her school district's pension structure. Is this switch (from Schedule F to Form 4835) accepted under these circumstances?

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Mike9241Answer

Level 15

Qualification for Form 4835

The IRS considers "material participation" to be the determining factor as to which farm income tax form you should file. If you're a traditional farmer who raises crops or livestock, you're considered a self-employed business person and you would file using Schedule F, Profit or Loss From Farming.

However, if you merely rent out your land to farmers and do not materially participate in the labor or management of the farming process yourself, you are considered a landowner, not a farmer, according to the IRS. Form 4835 is the way for non-participating farmland owners to report their farm income and expenses.

based on the info that was provided Schedule F is the appropriate form.

the fact that because she may never collect social security because of her pension plan, not sure this is true - she should contact the Social Security Adm to verify her status, has no bearing on the proper form to use. Improperly avoiding paying self-employment taxes when owed can result in substantial penalties.

you can also go to iRS website and review the instructions for the form/schedule and PUB 225

Mike9241

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