Finally, finally, finally....I think I understand this. All of us TT users think that we are entering 1099 data for the IRS when, in fact, we are entering it so that TT can enter the income on to the forms. If we were doing our taxes on the paper forms, we wouldn't do 1099 data entry. We would simply take the income from the form, whether it be listed as a "box 6, taxable grant" or "box 7, agricultural payment" and enter it into the correct form whether it be "other income", Schedule C or F. This year, we received 1099-G forms from the USDA with income in box 6 in one and box 7 on the other, so in our case, all I really needed to do was put this income on Schedule F under taxable income. I could put it under "other income" and avoid SE tax, but since this income made our farm show a profit, we gained the ability to include healthcare as a deduction and picked up qualified business deductions. Placing it on the Schedule F (or C in some cases) also provides the ability to deduct associated costs to complete the practice. Putting it down under "other income" does not give you the ability to do so. Maybe if your farm or business was very profitable, you would include the income under "other income" to avoid the SE tax, but it really benefited us to not do so this year. Thanks for all of your help. This has been an issue with me for the last 3 years...but now I think I have it and truly understand what and why it is this way!
