How the 2008 Farm Bill Helps Joint Filers Qualify for SDRP
Meeting the 75% Farm Income Requirement Through Married Filing Separately Elections
The Supplemental Disaster Recovery Program requires participating farmers to derive at least 75% of their gross income from agricultural operations. For married couples filing joint tax returns, this requirement can be challenging to demonstrate - especially when one spouse has substantial off-farm income.
Fortunately, a provision in the 2008 Farm Bill (and confirmed in the 2014 and 2018 Farm Bills) offers a solution: married farmers can request to have their income calculated on a Married Filing Separately (MFS) basis for 2023 and 2024 SDRP purposes, potentially allowing them to meet the 75% threshold.
The Challenge: Farm Income Percentages on Joint Returns
Most farm families file married couples filing joint tax returns. When USDA evaluates whether a household qualifies as primarily engaged in farming, it looks at the percentage of gross income from agricultural sources. The threshold is firm: 75% or more of average adjusted gross income must come from farming.
Consider a realistic scenario: A married couple operates a grain farm generating $300,000 in annual farm income. One spouse also works as a consultant, bringing in $150,000 in nonfarm income. On their joint return, their combined average adjusted gross income is $450,000. The farm income represents only 66.7% of the total - falling short of the 75% requirement. As a result, they fail to qualify for SDRP, despite farming being their primary enterprise.
The Solution: The 2008 Farm Bill’s Income Allocation Provision
Congress included this solution in the 2008 Farm Bill:
