Are federal agricultural payments (CRP payments) taxable?

[ekaykinter]

I believe they are but when I enter the amount in 4a, TurboTax doesn't flow the amount to Line 4b.  Shouldn't it?

[Cattlerancher · Accepted solution]

Yes, CRP payments are taxable but Self Employment tax may or may not apply. After you have entered the amount in the 1099-G section, review the Ag Programs section just below there in the Farm Income and Expenses section. Carefully read the interview, then TurboTax will enter the taxable portion on 4b and determine if SE tax applies.

It can also be done in the forms mode, but I recommend the Ag Programs interview first.

[ekaykinter]

Thanks for the info.  I also believe that CRP payments are taxable but Turbo Tax Home & Biz shows they are not.  Try it.  I entered the data as suggested on the 1099-G worksheet and it shows up (as it should) on Line 4a my schedule F.  Unfortunately it does to flow to 4b (taxable amount).  Turbo Tax needs to fix this problem or at least have a question/explanation that lets users know they can't just blindly accept that CRP payments are not taxable.  The ARE taxable.  Does anyone at TurboTax read this stuff?

[Cattlerancher]

Unfortunately TurboTax can't provide all the information and answers to everyone's different tax situation but they try hard. TurboTax is a do-it-yourself tax program and sometimes requires us to do our own research. I am including a paragraph from IRS publication 225 about CRP income.

Conservation Reserve Program (CRP)
   Under the Conservation Reserve Program (CRP), if you own or operate highly erodible or other specified cropland, you may enter into a long­term contract with the USDA, agreeing to convert to a less intensive use of that cropland. You must include the annual rental payments and any one­time incentive payment you receive under the program on Schedule F, lines 4a and 4b. Cost­share payments you receive may qualify for the cost­sharing exclusion. See Cost-Sharing Exclusion (Improvements), later. CRP payments are reported to you on Form 1099­G.
   Individuals who are receiving Social Security retirement or disability benefits may exclude CRP payments when calculating self-employment tax. See the instructions for Schedule SE (Form 1040).

[Cowboy-Paplam]

Good job.  Thanks for the analysis.  I also saw this Turbo Tax glitch and wondered the same.  CRP payments are taxable it appear to me.

[Cowboy-Paplam]

Thanks for your analysis.  I was using turbo tax and noticed this glitch as well.  Good info!