FSA Does Not Understand Tax Return Income

FSA Does Not Understand Tax Return Income

There seems to be some confusion for how FSA offices are computing line items from federal income tax returns for determining Adjusted Gross Income (or AGI) for purposes of payment limitations. In the new Farm Bill there the AGI has a $900,0000 limit of farm income, if a farmer’s income is over that amount — the farmer would have to pay back any FSA payments.
Some farmers and ranchers may or not be aware this issue, CliftonLarsonAllen Partner and Farm CPA Today Blogger Paul Neiffer explains It is one that needs to be clarified sooner rather than later
Neiffer: “On regular corporations and individuals, they allow section 179 as a deduction. On LLC and S corporations they essentially do not allow Section 179 as a deduction. Every CPA would say that a farmer if filing as a S corp or as an LLC — that farmer on a three-year average made $300,000 or $400,000. But because of Section 179 being at $500,000 for so many years now. FSA is saying that farmer made $900,000 or million dollars therefore the farmer needs to payback the payments from the FSA.”
Neiffer says that local FSA employees usually agree that it is incorrect in the 400 page manual of instructions — however, the federal office is pressing to use it as it written — which again does not allow Section 179 deductions for S corporations or LLCs when determining AGI.
Neiffer encourages farmers to speak with their U.S. senators and Congressmen/women to address this issue as soon as possible.
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