More Details on Stage 2
We provide some answers to questions we have received about Stage 2
After our post of yesterday we have gotten several additional questions on SDRP Stage 2 and in today’s post we will attempt to answer them.
Also, I was on AgriTalk yesterday discussing SDRP Stage 2 and you can listen to that here.
Q. Will FSA mail out a filled-in application to us?
A. It is our understanding that FSA will not be mailing a filled-in application to you. To sign up for Stage 2 you can apply for it by:
Going to the office in-person,
Electronically using Box and One Span,
Email,
Fax.
We believe that if you have crop insurance and had a shallow loss (you did not receive a claim but would receive a claim with the higher SDRP %), a filled-in application is available for you to review and then apply for SDRP Stage 2.
Q. Do I automatically qualify for Stage 2 if I got a Stage 1 payment?
A. We have received a number of questions along this line. The only way you receive a Stage 2 payment after receiving a Stage 1 payment is if you have a “crop insurance unit” that was separate from your Stage 1 payment and now it qualifies.
If you received a crop insurance indemnity payment on all of your “crop insurance units” under Stage 1, then you will not receive any additional payment under Stage 2 unless you have some type of quality loss that needs reimbursement.
As an example, during 2023, I collected crop insurance on my crops in Washington and Missouri, but not my corn crop in Iowa. Since I collected crop insurance on my Washington and Missouri crops, I will not be eligible for Stage 2 payments, but I will be eligible for a Stage 2 payment on my Iowa crop since I missed collecting crop insurance by about $100 and I had a qualifying event (drought and a freeze in June).
Q. Is the payment limit separate for Stage 1 and Stage 2?
A. No, it is a combined limit. Therefore, if you already hit the limit under Stage 1, do not waste your time applying for Stage 2. You will not qualify for an additional limit.
Q. Are equipment gains automatically considered farm income for Stage 2?
A. No. Equipment gains are only considered farm income if other farm adjusted gross income (AGI) exceeds 66.66% of total AGI. Equipment gains should automatically become farm income with any 2025 or later program. SDRP is a 2023 and 2024 program and are subject to the old rules.
Q. Can I defer any of the SDRP Stage 1 or 2 payments to 2026?
A. No. Even though the Tax Code allows you to defer these types of payments (similar to crop insurance), you can only defer them one year after DAMAGE. The damage occurred either in 2023 or 2024. Stage 2 refers to some 2025 crops however, the damage needed to occur in 2024 to qualify. Therefore, none of these payments can be deferred to 2026. If you really want to defer your Stage 2 payment, simply wait to file your claim until later in 2025. You have until April 30, 2026, to sign up for the program.