Taxes and USDA Programs

Tax time is a busy time of year for business owners, and this includes farmers and ranchers. Navigating filing your taxes can be challenging, especially if you are new to running a farm business, participated in disaster programs for first time, or are trying to forecast your farm’s tax bill. Receiving funds from USDA through activities such as a conservation program payment or a disaster program is considered farm income that includes a tax liability for farm businesses.

To better support America’s farmers and ranchers USDA has partnered with tax experts from across the country to connect producers to information and resources related to USDA program payments, asset protection, and the important relationships between federal income taxes and USDA farm programs.

Upcoming Webinars

Event: Farm and Ranch Tax Strategies 2023
Date: Wednesday, February 22
Time: 3 p.m. Eastern
There is a strategy to managing your taxes and now is the time to start planning. Join USDA and Bob Rhea, University of Illinois Tax School, to learn about tax management options for 2023.   

Register in advance for the webinar on February 22, 2023.

Event: Schedule F (Profit or Loss From Farming)
Date: Wednesday, March 22
Time: 3 p.m. Eastern
The Schedule F is used to report taxable income earned from farming, ranching, and agricultural activities. Join USDA and Guido van der Hoeven, President, Land Grant University Tax Education Foundation, Inc. (LGUTEF), for a line-by-line review of this tax form.

Register in advance for the webinar on March 22, 2023.

Preparing for Tax Season

Which Programs Create Taxable Payments?

USDA issues 1099 forms for:

  • Conservation programs administered by the Farm Service Agency and Natural Resource Conservation Service (such as the Conservation Reserve Program and Environmental Quality Incentives Program)
  • Crop disaster payments
  • Assistance for distressed borrowers, including through Section 22006 of the Inflation Reduction Act
  • Market Facilitation Program

Additionally, USDA issues 1098 forms for USDA farm loans, if:

  • The farmer is classified as an individual.
  • And if the farm ownership or operating loan is secured by real estate.

USDA technical assistance is free and creates no tax implications.

Inflation Reduction Act Assistance for Distressed Borrowers

On August 16, 2022, President Biden signed the Inflation Reduction Act (IRA) into law. Section 22006 of the IRA provided $3.1 billion for USDA to provide relief for distressed borrowers with certain Farm Service Agency (FSA) direct and guaranteed loans and to expedite assistance for those whose agricultural operations are at financial risk.  This publication from Ruraltax.org presents the basics about Section 22006, the tax consequences, tax management methods to consider, and farm management considerations. Borrowers with at-risk agricultural operations.

USDA has allocated up to $1.3 billion for initial steps to help distressed borrowers. This includes both automatic and case-by-case assistance. Recipients of this initial assistance will receive an Internal Revenue Service Tax Form 1099-G from FSA if they receive payments of $600 or more, which are subject to Federal and State Income Taxes. USDA is partnering with University of Arkansas (agftap.org), the National Farm Income Tax Extension Committee (ruraltax.org) and other partners to develop and deliver taxpayer education.

Learn more about IRA Assistance.

What Training Resources are Available?

USDA is working with farm tax experts throughout the country to compile resources.

General

 


 


 


 

Assistance for Distressed Borrowers

Tax Estimator Tool

The Tax Estimator Tool is an interactive spreadsheet that producers can download to estimate tax liability. It is for informational and educational purposes and should not considered tax or legal advice. Producers may need to work with a tax professional to determine the correct information to be entered in the Tax Estimator Tool.

The tool is available at Tax Estimator (ruraltax.org)

Filing Your Taxes

How to Find a Reputable Tax Preparer or Accountant

 

There are various types of tax return preparers, including certified public accountants, enrolled agents, attorneys, and many others who don't have a professional credential. You expect your preparer to be skilled in tax preparation and to accurately file your income tax return.

The IRS has several useful resources to ensure that your taxes are filed by a knowledgeable tax professional.  See the  following resources or visit www.irs.gov:

Directory of Federal Tax Return Preparers with Credentials and Select Qualifications

Choosing a Tax Professional

How to Prepare for Your Meeting with a Tax Preparer

 

Before meeting with a tax consultant or accountant, here are some important things to do or consider:

  • Gather all 1099, 1098 and other tax forms issued by USDA.
  • If you have a Farm Loan, visit the self-service website on farmers.gov to view your loan information, history, and payments.
  • Crop insurance proceeds must be included in your farm income.

Farmers can deduct certain conservation-related expenses. According to the IRS, you may deduct up to 25 percent of your gross farm income for conservation expenses.

How to get Copies of Your USDA Documents

 

If you haven’t received your USDA 1099 or 1098 forms, there are several helpful resources:

  • For NRCS-related 1099 forms, contact the 1099 Help Desk for reprints at 1-800-421-0323. You may also send an email to 1099helpdesk@usda.gov.
  • For FSA-related 1098 forms, call 866-729-9705.

Or visit your local USDA service center. To find yours visit: farmers.gov/service-locator.

This webpage and its resources are part of a broader effort by USDA to provide tax education and resources. USDA’s partners include the National Farm Income Tax Extension Committee and Extension Ag Tax Experts from around the country.

Find Your Local Service Center

USDA Service Centers are locations where you can connect with Farm Service Agency, Natural Resources Conservation Service, or Rural Development employees for your business needs. Enter your state and county below to find your local service center and agency offices. If this locator does not work in your browser, please visit offices.usda.gov.

Visit the Risk Management Agency website to find a regional or compliance office or to find an insurance agent near you.