USA Profit sharing tax liabilities


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I am a small organic farmer. In former years, I hired seasonal workers and paid them as W2 employees or used short-term volunteers who were compensated with room and board. In 2020, this wasn't going to work, so when a local young farmer approached me with the idea of using my gardens in a profit-sharing arrangement, I figured I had nothing to lose. He grew produce; I marketed it through my farm store; and we split the net profits %60-%40. I did not hire him, so there was no employment agreement and no W2; this was a sideline for him so there was no 1099. In March 2020 I had no expectation that there would be any profit to split, but it turned out to be a good year for small local produce operations and I ended up writing checks to him for approx. $2K, which I simply recorded as production labor expense, which is accurate, but the IRS and SSM obligations will be met only if my partner reports it as self-employment income.
Now as I am finishing up my own taxes, I am wondering (a) how I should have accounted for this; and (b) if there is anything I should now do to correct it.
 
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Dec 19, 2020
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That's what you need an accountant for.
Being a do-it-yourselfer brings on issues after the fact you don't realize.
 
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