Agricultural Program Payments

[JackieCPA]

I have a new client this year who is an active farmer (with a schedule F).

He is also on social security benefits.

He receives Ag. program payments. Prior preparer put those on the schedule F. 

My understanding is that if the taxpayer is on social security they do not have to pay self-employment tax on the payments and those payments should not be reported on the schedule F.

 

Am I correct or is the prior preparer correct?

 

Thanks!  

[Gail in Virginia]

I thought they went on schedule F. 

[JackieCPA]

Yes, but if the taxpayer is drawing on Social Security, they get an exclusion and don't have to pay self-employment tax on the payments.

That is from what I understood. I believe it is Section 1402(a)(1) exclusion.

[Marie]

i thought only CRP payments could be subtracted from SE

[TaxmannEA]

Agree with Marie. Only CRP payments are excluded from SE tax. All other ag payments are still subject to SE.

[Richcpaman]

What if the Farmer is still actively farming?

You can collect SS benefits, but still be working the farm. 

And we can only exclude CRP from SE?  If so, report on Sch F for matching, but not taxed, and then move to line 21? (the OLD line 21...;)

Rich 

[Marie]

line 1b on the SE form is the subtraction for crp payments.

[DANRVAN]

On 2/10/2019 at 8:07 AM, Richcpaman said:

What if the Farmer is still actively farming?

You can collect SS benefits, but still be working the farm. 

And we can only exclude CRP from SE?  If so, report on Sch F for matching, but not taxed, and then move to line 21? (the OLD line 21...;)

Rich 

Marie is correct, CRP payments are included on F but excluded on SE.

Other ag payments not excluded from SE.