MN CRP Payments Taxes?

I wasn’t sure where to put this out there but thought the hunting section would be appropriate. I would think that many on here are landowners in MN and possible have land in CRP. So I recently moved to MN and the house and land that I bought has 45 acres enrolled in CRP. I am not a farmer nor do I raise cattle or anything like that. My question is how do I report this payment. According to the IRS you are supposed to report it on a Schedule F form for self employment tax. That is pointless as I am not farming. I do not have an accountant or anything like that as I usually do my taxes myself so I have not contacted anyone. Just curious how others are handling this.

Thanks for any responses.

RVRDUX

Stop by your local NRCS office they will help.

I have some CRP land but no cattle, crops, etc. like you. You should receive a 1099-G form that states the amount of your CRP payment received in 2015. There is a line for this on Schedule F (Profit or Loss from Farming) I don’t worry about self-employment tax since the payment is not very significant compared to my other income. I assume the same would be true for you having just 45 acres of CRP. The Schedule F will have lines for property taxes and mortgage interest deduction. You’ll have to determine how much of the property taxes and mortgage you pay are for the CRP land vs. the house. Perhaps your property tax statement will have that broken out. I use Turbo Tax. I don’t know if you’ll want to try to depreciate anything like fences or culverts. If you have depreciation deductions, that makes things more complicated.

Disclaimer: I’m not an accountant or tax attorney but that’s what I do. Pretty simple really.

I know most everything, just don’t ask my wife, she will tell you the way it really is. I can tell you that money is not in the top 5 of my knowledge range. We hire out investments and taxes. I am starting to wind down my career and the investment part of it is changing as the short term is more important than the long term. Taxes laws change from year to year and trying to figure it out takes more time than it costs to hire someone with all that knowledge and all I have to do is sign the forms and a check for the service.

If you are in the 8th Circuit, (only available in the 8th circuit as the IRS has acquiesced for taxpayers in the 8th Circuit) you may qualify to report the CRP payments on Form 4835 rather than Schedule F. The difference is the net income on the 4835 is not subject to self-employment tax.

To qualify to report these payments on 4835, you would need to be able to justify that you are not a farmer, the payments are not in lieu of farm income, your are retired from farming, or something similar. The facts and circumstances would need to be looked at to make a determination.

JD