Download Full Text (163 KB)
Self-employment tax is imposed on net earnings derived from self-employment. That phrase is defined as gross income derived by an individual from a trade or business that the taxpayer conducts. However, rents from real estate and from personal property leased with real estate are excluded from the definition of net earnings from self-employment. Likewise, income from crop-share and/or livestock-share rental arrangements for landlords who are not materially participating in the farming operation are not classified as self-employment income subject to Social Security tax (and, thus, do not count toward eligibility for Social Security benefits in retirement).
Iowa State University Extension and Outreach
Agricultural and Resource Economics | Agricultural Economics | Agriculture Law | Public Economics
McEowen, Roger A., "Leasing Arrangements and Self-employment (Social Security) Tax" (2014). Ag Decision Maker Information Files. 5.