Level 3

Solved

1099-G AGRICULTURE DEPT TRP SEAFOOD INCOME

Forum|Forum|5 years ago
March 14, 2021
15 replies
51 views

The taxpayer is a self employed lobsterman (Schedule C) and received a Form 1099-G from the US Dept of Agriculture, block 7, Total Agriculture Payments, of $11K. I can find documentation that the income is taxable but cannot find guidance whether this income is also subject to Self Employment Tax.

The Proseries input for Form 1099-G does not have a place to input agriculture payments that will link to a Sch C, only links to Sch F and Form 4835, so it appears the income has to be input on Line 1a for Other Gross Receipts along with sales.

Any guidance is appreciated.

ProSeries Professional

This topic has been closed for replies.

Best answer by Terry53029

No, the Grant is considered as a personal Grant. You do not pay Self-Employment tax on it.

enter it on the personal Income section under "Other Income".

Slats

Level 5

I would use Schedule F, which is the best form for Farmers and Fishermen. While some of the expense item lines will not be applicable, there is Line 32: Other Expenses where you can list anything that doesn't fit lines 10 through 31 by category of expense. Fishing business refers to the catching, taking or harvesting of finfish, mollusks, crustaceans, marine animal and plant life, except marine mammals and birds. You also have the choice to use Schedule J, Income Averaging and possibly reduce what could be the tax liability for the current year. Yes, income from fishing is considered self-employment and is subject to self employment tax. Using Sch F will allow you to flow from 1099-G to Schedule F seamlessly and be the correct form to use.

K

kirkaveryAuthor

Level 3

Thanks for the prompt response to my question. IRS Topic No 416, Farming and Fishing Income, clearly states fishing income is to be reported on Sch C and farming income goes on Sch F.

What I am not clear on is whether the seafood Trade Relief Program income reported on Form 1099-G is subject to self employment tax. Is there any guidance on that issue?

T

Terry53029

Answer

Intuit Community Champion

No, the Grant is considered as a personal Grant. You do not pay Self-Employment tax on it.

enter it on the personal Income section under "Other Income".

qbteachmt

Level 15

I don't see how this is Personal. USDA grants relate to production, and this is not a CARES grant. This is a Trade Relief program. I see this from a Maine Lobster guidance document:

"You will receive a 1099 to claim earned income at the end of the year for funds received"

It's to offset lost revenue due to foreign trade wars and would be regular business revenue.

Don't yell at us; we're volunteers

T

Terry53029

Intuit Community Champion

It is not for lost revenue, it to develop new markets.

As previously stated, the intent of STRP is to provide financial assistance to commercial fishermen for expanding or aiding in the expansion of domestic markets for U.S. commercially caught and sold seafood, because seafood commodities have been impacted by trade actions of foreign governments resulting in the loss of exports. The limited discretionary aspects of STRP (for example, determining AGI and payment limitations) were designed to be consistent with established FSA and CCC programs, but also take into account certain differences associated with seafood production from crop production. These discretionary aspects do not have the potential to impact the human environment as they are administrative. Accordingly, the following Categorical Exclusions in 7 CFR part 799.31 apply:

K

kirkaveryAuthor

Level 3

My initial research on the TRP program led me to a message from the commissioner for the Department of Marine Resources. The commissioner stated the TRP program was to "support the U.S. seafood industry and fisherman impacted by retaliatory tariffs from foreign governments". This message listed one of the eligible species as lobster. The message went on to say "Payments will not need to be repaid and there is no cost to apply however the payment will be considered taxable income".

What I was not clear on whether this income was subject to self employment tax. I see there has been much litigation as to whether other agricultural payments are subject to SE tax. It appears to me the IRS has been consistent is asserting agricultural payments to farmers who are materially involved in the farm are subject to SE tax on those payments (except if they are receiving retirement or disability benefits from the Social Security Administration).

I was hoping to find some guidance that the TRP payments were not "earned income" in the sense they would be subject to SE tax. So far it appears there is not clear guidance.

Sign up

Login with SSO

Let's get you signed in

Login with SSO