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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

One AGI Instead of Three

Jun 27, 2012

For farmers who are enrolled in ag programs with the FSA, there are currently three different levels of AGI (adjusted gross income) that affect whether they qualify to receive any payments from the FSA during the year.  These levels are:

  • $500,000 of non-farm income
  • $750,000 of farm income
  • $1,000,000 of non-farm income, but OK if 66.66% is from farm income

These levels were implemented with the 2008 farm bill and we are just now starting to see payments being disallowed. In some cases, the disallowance is due to income earned before the farm bill was even implemented, which prevents us from doing any planning.

The Senate farm bill passed last week contains a provision that will only disallow payments due to AGI being more than $750,000 from all sources on a rolling three-year average. This provision will apply to 2013-2017 crops. For many of our farmers, this will be fairly easy to stay under, but there may be many farmers with substantial off-farm income that will trip them up if they don't do planning.

Also, remember, with the new farm bill there are no more direct payments and a farmer will normally only receive a payment if certain crop insurance triggers are met. If farm prices stay fairly high and no weather issues arise, the chance of a farmer collecting any funds during these years may be slim or none.

We will continue to update our readers on pertinent provisions of this farm bill over the next few weeks and perhaps the House will get its act together and get a final bill before Labor Day.


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