Form CCC-1099-G "Report of Payments to Producers"

[Black Bart]

Does anybody know if this "government money" form BY ITSELF will trigger a notice from IRS that the recipient should have filed a return?

I have an elderly client who rents out her small acreage, gets about $2K of these gov't agri payments and another $2K or so of crop rent. No other income except SS. Obviously it's not enough to require filing, except -- would IRS look at this form the same way they would a 1099-MISC which has self-employment income on it? This gov't. money is taxable for social security to someone who is farming the land, but in this case she's renting it out and no social security is due. However, there's no way for IRS to know that unless and until I file a return and the 4835 is waved under their noses.

I'd like to quit filing this and save her some money and me some time, but although she never owes any money, I'm sure she'd be upset if I tell her not to file and she later gets an IRS letter asking for a return (they're always positive you've screwed things up and that IRS is going to hang them).

So, the question is, will that 1099 make the IRS send her a letter next fall asking for an '07 return? I should know this, but this situation doesn't happen often and I've never not done ond and waited to see what happened. Have you?

[Snaggletooth]

Soil Bank

What is the nature of the USDA payments? If we knew the nature, we would have some idea as to whether the payment triggers SE tax or not.

Example: Soil bank (where landowner is paid NOT to grow anything) Since the landowner is not doing anything, this can't be earned income. Example: Drought relief. Implies that the farmer is actually producing something, else no need to apply for relief. Sounds like earned income. Example: Reforestation - probably implies no earned income. Example: Soil conservation - probably implies earned income.

If you can justify moving these payments to Form 4835 activity, that would totally remove the earned income factor and possibly exempt the taxpayer from having to file totally.

[Black Bart]

They are payments

What is the nature of the USDA payments? If we knew the nature, we would have some idea as to whether the payment triggers SE tax or not.

Example: Soil bank (where landowner is paid NOT to grow anything) Since the landowner is not doing anything, this can't be earned income. Example: Drought relief. Implies that the farmer is actually producing something, else no need to apply for relief. Sounds like earned income. Example: Reforestation - probably implies no earned income. Example: Soil conservation - probably implies earned income.

If you can justify moving these payments to Form 4835 activity, that would totally remove the earned income factor and possibly exempt the taxpayer from having to file totally.

from:
USDA
Farm Service Agency - Commodity Credit Corporation

for: Direct and Counter Cyclical Program (whatever that means).

But, basically, they're price supports for cotton and I'm assuming some of the payments are for letting the land "lay out" (not planting anything on it). It is considered SE income to a farmer (there's a line for it on Schedule F), but not a landlord.