If you receive income from renting out farmland and do not materially participate in the farm's operation or management, you may need to report that income on Form 4835, Farm Rental Income and Expenses.
How to Enter Form 4835 in Our Software
Follow these steps:
- Go to Federal.
- Select Income (Select My Forms).
- Choose Less Common Income.
- Select Farm Rental Income and Expenses (Form 4835).
Who Should Use Form 4835?
Form 4835 is generally used by:
- Landowners who rent farmland to a tenant farmer.
- Sub-lessors who receive rental income based on crops or livestock produced on the farm.
- Taxpayers who do not materially participate in the farm's day-to-day operation or management for self-employment tax purposes.
In most cases, income reported on Form 4835 is considered rental income rather than self-employment income.
When Should You File Form 4835?
Use Form 4835 only if the arrangement qualifies as a rental activity under the passive activity loss rules. These rules can affect whether losses from the activity can be deducted on your return.
For more information about rental activities and passive activity limitations, see the Instructions for Form 8582, Passive Activity Loss Limitations.
Helpful Resources
- Form 4835, Farm Rental Income and Expenses
- Instructions for Form 8582, Passive Activity Loss Limitations
Before You Start
Have your farm rental records available, including:
- Rental income received
- Farm-related expenses
- Information about any crop-share or livestock-share arrangements
Keeping accurate records will make entering your Form 4835 information faster and help ensure your return is filed correctly.
Related Tip
If you materially participate in the farming activity, you may need to report the income on a different tax form, such as Schedule F, instead of Form 4835. The correct form depends on your level of involvement in the farming operation.