Will forming a partnership and getting a tax number affect how I file and pay income and other taxes?
My siblings and I own farm land together, and receive income from it via a share of the crop proceeds. Currently, I just add it to my income taxes, but I don't pay social security or medicare taxes on it. We are thinking about forming a partnership and getting a tax number so we can open a business bank account just to use for farm stuff. (It will make things much simpler.) But does that affect how we file and pay taxes? We will need to start paying FICA on the 1-2K a year we each make?
- 4 weeks ago
It will affect how the taxes work, yes. You need to consult a tax attorney for advice.
- A HunchLv 74 weeks ago
Farming income goes on a Schedule F and is subject to self employment tax.
I don't know all the itty bitty tax laws but unless there is something unique, you should have been paying self employment tax.
Forming a partnership, might change how this is paid, but it doesn't change the need to pay this. However, a partnership is not free and if you are making under $10K, it's not likely that it would be economically in your best interest.
- JudyLv 71 month ago
Who actually does the work on the farm? If you and your siblings, you should be paying into ss and medicare for it. But in any case, if you form a partnership, the partnership will also have to file a return, and give you paperwork called a K-1 showing your share of the income and expenses, to put on your personal return.
- BrianLv 61 month ago
If you're actually depending on YA for tax advice, good luck to you. The IRS won't be impressed with "well, YA said that I could do it this way........"