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Self Employment tax

Discussion in 'Off Topic Threads' started by Doug Brown, Jun 14, 2012.

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  1. Doug Brown

    Doug Brown Well-Known Member

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    I own an 80 acre farm (for deer hunting) & it produced an income. I declared the income & paid the income tax on it. Today I get a letter from the IRS saying I owe self employment tax also, inlieu of the social security & medicare I didn't pay on the income. I could live with all this, but the self employment tax money does not go in "my" social security/medicare account, it just goes to the IRS. For what? Seems wrong to me!
     
  2. tonyabluhm

    tonyabluhm TS Member

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    Doug, you send the check to the IRS, and they send it to SS with your info so you get credit for it. You will see it added to your statements as money you paid. In this case the IRS is simply a collecting agency.
     
  3. halfmile

    halfmile Well-Known Member

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    If you made the money working in a convenience store the Social Security would have been taken out. You have to pay it because no one else can.

    ALL earned income up to a certain amount are subject to SS.

    That said, this could be UNEARNED income which is a different story.

    If we are talking about any significant amount here you may need to file an amended return. Go to the IRS office and talk to the gnomes.

    HM
     
  4. Dickgshot

    Dickgshot Well-Known Member

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    You may be able to substantially reduce that self employment tax by using the farm optional method. You probably will have to file an amended tax return to make that election.
     
  5. dmarbell

    dmarbell Active Member

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    Like Dickgtax said. Plus, you didn't say what the nature of the income was. If it was rental income, it might not be subject to SE Tax. If you ran the farm and it made a profit, it would be.

    Danny
     
  6. yodes

    yodes TS Member

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    If you actively managed the farm, you report the income on sch. F, and it is subject to self-employment tax. If you did not actively.manage the farm, report the income on form 4835, then it is not subject to self-employment tax. Hope this helps.

    Steve
     
  7. Doug Brown

    Doug Brown Well-Known Member

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    Check's in the mail- Thanks
     
  8. g7777777

    g7777777 TS Supporters TS Supporters

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    See a tax guy

    The question is what did you do with the income? If you left it in a Corporation and didnt take it into your own account or didnt pay yourself a salary- than that should not apply

    So the real question for the tax guy and the answers to those is what did you do with the income and does that matter as far as self employment tax

    Regards from Iowa

    Gene
     
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