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Visitor II

Roth IRA and Minor with Farm Income

Hello,

 

I have a young child who raised some pigs this year.  Several will be sold to private buyers at market price and one was sold at a 4H auction (above market price because it was awarded grand champion at the county fair).  This will be her first real income ever and 2018 will likely be the first year I do taxes for her because of this income.  I have two questions:

1) I assume I'll have to report this income on a Schedule F (Form 1040).  Is this correct?

2) Does this income qualify for a Roth IRA?

 

Thanks in advance!!

 

 

1 Comment
Catalyst V

Roth IRA and Minor with Farm Income

I question if SCH F is the correct form. It might be a SCH C business. If you'll check out Part IV of the SCH F at

https://www.irs.gov/pub/irs-pdf/f1040sf.pdf you'll see it states:

Do not file Schedule F (Form 1040) to report the following. 

• Income from providing agricultural services such as soil preparation, veterinary, farm labor, horticultural, or management for a fee or on a contract basis. Instead file Schedule C (Form 1040) or Schedule C-EZ (Form 1040). 

• Income from breeding, raising, or caring for dogs, cats, or other pet animals. Instead file Schedule C (Form 1040) or Schedule C-EZ (Form 1040). 

Sales of livestock held for draft, breeding, sport, or dairy purposes. Instead file Form 4797.

So based on that last item, I question if a SCH C will be filed, with Form 4797 to report the sale of business property. Depending on the purpose for which they were raised and sold, I would go with SCH C. Then any taxable profits from the SCH C business can count for retirement contribution.