Old Rules Apply on More Than 75% Farm Income
We reply to multiple readers on this topic
We are getting way too many questions on the SDRP extra payment limit for farmers.
This is a 2023 and 2024 program, therefore, in order for the farmer to be a “farmer” under USDA rules you have to meet the following requirements:
1. You must calculate income as if you filed married filing separate even if you filed a joint return. All income from the non-farmer spouse is removed and not included in the calculations.
2. This based on adjusted gross income right off of line 11 on the Form 1040 or appropriate lines for entities. It is not based on average gross income. Those rules likely for programs similar to SDRP will be based on average gross income, but that does not apply to 2023 or 2024.
3. Equipment gains are only farm income if your other farm net income is greater than 66.66 of total AGI (without the equipment gains in our opinion). This is very difficult for many farmers to meet the requirement.
4. There is no special add backs for NOL’s etc. If they show up on the return it was caused by farming, then it is farming income.
5. There is a lot more income that qualifies as farm income than under tax laws. This includes all rental income of farmland (including cash rental) and equipment, all gains on farmland sales, wages and dividends received from a farm corporation, etc. The Form FSA-510 lists most of the income tax qualifies.
The bottom line is it will be difficult for many farmers to qualify under these rules than the new ones going into effect for the 2026 crop year.