Farmer and stimulus

[JenMO]

Farmer had a loss on the farm and paid on the option. Wife had sch c income. Will the wife's income and the farmer's option $1600 be added together to get the $3000 to be eligible for the stimulus? It doesn't show that way on the front sheet, but it does on Sch SE s. Will that work?

[Koss]

Optional SE tax

I don't think that will work.

If the wife's Schedule C income is under $3000, and they don't have any other qualifying income on the front page of Form 1040, then I don't think they're eligible for the rebate.

The stimulus payment is based on qualifying income, which includes certain things that don't normally appear on a tax return, such as veteran's benefits, and certain income that normally isn't included in AGI such as social security benefits. But all that stuff is still income. It's just not taxable income. It's qualifying income as this term is defined by the stimulus legislation.

Your client doesn't have sufficient qualifying income. He's chosen to pay self-employment tax on a certain amount of imputed income, but it's only imputed for purposes of self-employment tax. It's not income in any other sense.

There is a similar concept of imputed income that is used for calculating the Dependent Care Credit in the case of a disabled spouse, or a spouse that is a full-time student. The Dependent Care Credit is normally available only when both spouses work. If one spouse works and the other is disabled, or a full-time student, you have to pretend that that spouse has a certain amount of income in order to accurately calculate the credit.

That imaginary income isn't qualifying income for the stimulus payment either.

[JenMO]

One place I read that referred to clergy housing income on Sch SE, so that's why I was asking about farmer's option SE. I have put some machine hire on his farm schedule. If I put this on a Sch C, I guess that would qualify him for the stimulus. But most farmers have to have two jobs around here, and expenses melt from farm to machine hire. I don't know how to divide. Perhaps they will have to wait til next year.