With NRCS High Tunnel Incentive I'm going to assume you have a farm and are filing out a Schedule F.
I will give you the process first. The directions come from a site devoted to handling tax issues specifically for farmers and I am pasting their info following my directions:
There is a glitch with Turbo Tax, because you are entering the taxable grant within your form F,
DO NOT allow TTAX to generate a 1099-G Form, delete it if you've done this.
As uncomfortable as it may feel, select no to receiving this form in step-by-step if you are filing Schedule F for farming.
- Get out of step-by-step and go to Forms, choose "Schedule F"
- Scroll down to Part I Farm Income, then scroll down to 4a Agricultural Program Payments
- Move your cursor to the right and click on the line after 4b (Taxable Amount)
- You should get the "supporting details box" (you may need to click around a bit for it to finally show up)
- Type in: 1099-G HIGH TUNNEL INCENTIVE NRCS EQIP GRANT and enter the amount of your grant then close the box
- Scroll down to Part II Farm Expenses, continue until you reach line 12, Conservation Expenses
- You should get the "supporting details box" on the line to the right, within this box you need to expense out
your grant: Cost of the high tunnel kit, labor cost, materials cost including additional hardware, lumber, seed/straw, etc
In this way, the cost of your high tunnel should be directly associated with the grant.
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www.farmraise.com/blog/how-to-maximize-your-tax-refund-if-you-got-an-eqip-grant
Are EQIP Funds Taxable?
Yes. Funds received through a conservation contract with the USDA, such as EQIP, are taxable income, which means that they will be included your total income for the year. Any EQIP payments would be considered “government program payments” in your income line items.
If you received an EQIP grant for your farm, ranch or forestland, the Natural Resources Conservation Service (NRCS) will send you a Form 1099-G which you should use to complete your tax return.
Take note! EQIP funds have two components: the funds you receive through the program, which are considered taxable farm income, and the funds you spend on the conservation expenses. Your incoming funds from the USDA will show up as income, and your outgoing expenses can be categorized as “conservation” expenses and deducted from your taxes (up to 25 percent of your total income).
How To Save Your Farm Business From Hefty Taxes
It might not sound so appealing that money granted to you by the government is taxable. The good news? There’s a fix that your tax preparer can employ.
Section I.R.C. 126 of the IRS tax code allows farmers to write large EQIP grants into this section to protect them from being categorized as taxable income and expenses. To ensure that you’re maximizing your tax return, you should check with their tax preparer to make sure they’re up to date on I.R.C. 126 along with the farm’s tax records. This can save you thousands of dollars in taxes, untold time and stress navigating the tax implications of your hard-earned EQIP project.
Lines 4a and 4b: Reporting Government Farm Payments
On line 4a, record the total government farm payments you received, which cover various sources:
- Payments from programs like price loss coverage and agriculture risk coverage.
- Funds received through the Market Facilitation Program.
- Gains obtained from repaying a Commodity Credit Corporation (CCC) loan for less than the original loan amount.
- Diversion payments.
- Money received for cost-sharing, such as sight drafts.
- Payments provided in the form of materials, like fertilizer or lime, or services, such as grading or building dams.
- You typically receive information about these payments from Form 1099-G or Form CCC-1099-G issued by the Department of Agriculture.
(continues with add'l CCC Loan Funds info and expensing out directions)
