Farming includes cultivating land, operating dairy farms, fruit farms, nurseries, orchards, poultry farms, fish farms, plantations, ranches, stock farms, and truck farms. It also includes the breeding and raising of fur-bearing animals or laboratory animals. However, it doesn’t include the breeding, raising, or caring for dogs, cats, or other pets.
Your farm income includes both money and the fair market value of property or services that you receive. Determining the profit or loss from a farm is essentially no different than determining the profit or loss from any other business. However, because farm returns contain types of income and expenses unique to farming, you use Schedule F (rather than Schedule C) to calculate the profit or loss of your farm if you’re self-employed. You’re self-employed if you operate your own farm on land that you either own or rent.
Because you’re self-employed, you obtain Social Security coverage by paying self-employment tax. If your farm income is below a certain level, there’s another method you can use instead to compute self-employment tax.
Because it’s difficult to predict farm income, the estimated tax rules are relaxed a bit for farmers.
For more information, see IRS Publication 225, Farmer's Tax Guide.