There are at Least Three AGI Tests for Farm Programs

OBBBA has added in a new AGI test for certain programs

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Many farmers understand that there are Adjusted Gross Income (AGI) limits on many farm programs.

ARC and PLC have a $900,000 overall limit; however, this is applied on an as if married filing separate basis. For farmers in community property states, this effectively means that your overall AGI limit is $1.8 million since income is automatically split 50/50 on tax returns in these states.

For other states, it gets trickier. AGI will be based on who owns or controls the income.

As example, assume that Bob is a doctor earning $1.0 million and his spouse Barb and him have a general farm partnership that generates $600,000 of net farm income each year.

In a community property state, Bob is only deemed to earn $800,000 ($1.6 million divided by 2) but in a separate property state, he is deemed to earn $1.3 million ($1 million plus half of the farm earnings). Therefore, in the community property state they qualify for two payment limits, in the separate property state, only one limit.

If you filed a married filing joint tax return and your AGI exceeded the $900,000 limit, but you would be under if you had filed married filing separate, your CPA or attorney can write a letter letting FSA know what that number would be. You are not required to amend your income tax return but just work up the numbers.