1099-PATR and Auto-generating self-employment taxes

Lunastriker

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?

KristineS

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.

Lunastriker

Of course it was buried on page 33.

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