1099-PATR and Auto-generating self-employment taxes

Lunastriker
Lunastriker Member Posts: 6 Newcomer
edited January 2025 in Income

I have a loan through a co-op for a piece of land that is NOT part of a business is NOT for-profit. Generally, it's just some land. My co-op sends me a 1099-PATR showing patronage dividends.

I entered this in FTU as Business Income on Schedule C, as the FAQ suggested, however, the system then generates self-employment taxes on this. Are patronage dividends subject to self-employment taxes? Aren't they simply taxable income?

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  • KristineS
    KristineS FreeTaxUSA Agent Posts: 278 image
    Answer ✓

    Hi Lunastriker,

    Welcome to our Community.

    If a cooperative has paid at least $10 in patronage dividends and other distributions to you, you should receive a Form 1099-PATR.

    In general, this income is either reported on Schedule C if related to a business, or Schedule F, if related to farming income. In your case for the land, it sounds like it would be reported on Schedule F. You report patronage dividends on your Schedule F where we ask for Cooperative Distributions in the Income section of Schedule F.

    IRS Publication 225 has more information on this starting on page 14 of the PDF.

    However, IRS Publication 550 (see page 33 of the PDF) says this in part about Patronage Dividends:

    "Do not include in your income patronage dividends you receive on: • Property bought for your personal use.."

    If this is the case for you, you don't need to include the income, but of course keep the form for your records.

Answers

  • Lunastriker
    Lunastriker Member Posts: 6 Newcomer

    Of course it was buried on page 33.

    I think I stopped after page 10. Thank you for your help!

  • clevelandrox
    clevelandrox Member Posts: 1 Newcomer

    My question is this…I have to enter a 1099-PATR related to my membership in the co-op where I work. It's asking me what kind of work do I do for my small business. I work there, but own a share in the company through the co-op, so how do I answer the 'what kind of work' question? Do I just enter my normal job with the company? I have no idea what to put there. Thanks in advance.

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 963 image
    Hello clevandrox,

    It sounds like you are filling out the Schedule C to report your 1099-PATR. Yes, answer the question about what sort of work you do and then select a business code.

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