Commercial fisherman taxes and deductions

If you are paid a share of the catch on a boat whose normal operating crew is fewer than ten, you are not an employee. That share is self-employment income on Schedule C with self-employment tax on it, and nobody is withholding a cent.

Ten or more crew, or cash beyond a small per-trip amount unconnected to the catch, and you are back to being an employee. The compensating advantage is income averaging: fishing qualifies alongside farming, so an exceptional season can be spread back across the three prior years at those years' rates on Schedule J. It does not reduce self-employment tax, only income tax. Vessels, gear and electronics are Section 179 property; permits and quota are intangible assets rather than expenses.

The rest of the commercial fisherman deduction list

Ordinary and necessary business expenses, deductible in full in the year you pay them, provided they are genuinely for the business:

Vessel costs
Fuel
Gear and equipment
Permits and licenses
Insurance
Crew shares
Maintenance
Moorage and landing fees

Worth knowing

A crew share on a small boat is self-employment income rather than wages, and fishing income can be averaged back three years.

That is what is specific to this trade. The larger deductions are the universal ones, see the full checklist.

What each deduction is worth to you

On $100,000 of profit with no state income tax, $1,000 deducted saves $305, 30.5%, because it comes off self-employment tax and income tax together:

Net profit	Saved per $1,000 deducted	Effective
$40,000	$231	23.1%
$100,000	$305	30.5%
$200,000	$297	29.7%

The last row is worth less than the one above it, and that is not a mistake: past the Social Security wage base the self-employment part of the saving drops from 15.3% to 2.9%, and the higher income-tax bracket does not quite make up the difference. A deduction is worth most in the middle.

Add a state income tax and every row rises. The 1099 calculator applies that layer.

Where this comes from

The rules on this page that are specific rather than general are cited below. Follow a link to read the provision itself rather than taking our word for it:

A crew share on a boat with a normal operating crew of fewer than 10 is not FICA employment and is self-employment incomeIRC 3121(b)(20); IRC 1402(c)(2)(F)
Farm and fishing income may be averaged back over three base years on Schedule JIRC 1301

What these words mean

Schedule C: The form you attach to your federal tax return to report profit or loss from a business you run yourself. Income minus expenses; what is left is your net profit.
Section 179: A rule letting you deduct the whole cost of equipment in the year you start using it, instead of spreading it over the years you own it.

General information about how these deductions work, not tax advice. Whether a particular expense is deductible for you depends on facts this page does not have, check with a tax professional before claiming anything listed here.