Cultivating Your Claim: How Farmers with Farm Income Can Get Their Stimulus Checks

The economic landscape for farmers is unique, characterized by fluctuating commodity prices, unpredictable weather, and significant investments in land, equipment, and livestock. When stimulus checks, officially known as Economic Impact Payments (EIPs), were disbursed to provide financial relief during the COVID-19 pandemic, many farmers found themselves navigating a complex tax system that doesn’t always align neatly with traditional employment.

If you’re a farmer and believe you missed out on your stimulus checks – or weren’t sure if you even qualified due to the nature of your farm income – this comprehensive guide is designed to help. We’ll break down how farm income is treated for stimulus eligibility, what steps you need to take, and what pitfalls to avoid.

Understanding the Stimulus Checks: A Quick Recap

Before diving into the specifics of farm income, let’s briefly recap the three rounds of Economic Impact Payments:

1. EIP 1 (CARES Act, Spring 2020): Up to $1,200 per eligible individual ($2,400 for married couples filing jointly), plus $500 per qualifying child dependent. Primarily based on 2019 tax returns (or 2018 if 2019 wasn’t filed).
2. EIP 2 (Consolidated Appropriations Act, December 2020): Up to $600 per eligible individual ($1,200 for married couples), plus $600 per qualifying child dependent. Primarily based on 2019 tax returns.
3. EIP 3 (American Rescue Plan, March 2021): Up to $1,400 per eligible individual ($2,800 for married couples), plus $1,400 per qualifying dependent (including adult dependents). Primarily based on 2020 tax returns (or 2019 if 2020 wasn’t filed).

Key Eligibility Factor: The primary determinant for all three payments was your Adjusted Gross Income (AGI). Payments began to phase out above certain AGI thresholds (e.g., $75,000 for single filers, $150,000 for married filing jointly).

Farm Income and Adjusted Gross Income (AGI): The Crucial Link

This is where the unique nature of farming comes into play. For tax purposes, most farmers report their income and expenses on Schedule F (Profit or Loss from Farming), which is then incorporated into their Form 1040 (U.S. Individual Income Tax Return).

It’s critical to understand that your farm’s gross income is NOT your AGI.

1. Schedule F Calculation: On Schedule F, you report your gross farm income and then deduct all your ordinary and necessary farm expenses (e.g., feed, fertilizer, repairs, depreciation on equipment, fuel, interest, taxes, insurance).
2. Net Farm Profit or Loss: The result of Schedule F is your net farm profit or loss. This amount then flows to your Form 1040.
3. Other Income/Deductions: On your Form 1040, your net farm profit (or loss) is combined with any other income you might have (e.g., off-farm wages, investment income, rental income).
4. Adjustments to Income: From this total, you then subtract certain "above-the-line" deductions, such as deductible half of self-employment tax, contributions to IRAs, or student loan interest.
5. Your AGI: The final result after these adjustments is your Adjusted Gross Income (AGI). This is the figure the IRS used to determine your stimulus check eligibility and amount.

Example: A farmer might have $200,000 in gross farm income, but after deducting $180,000 in expenses (including depreciation), their net farm profit is only $20,000. If they have no other income, their AGI would be close to $20,000, making them highly eligible for stimulus payments.

The Impact of Farm Losses: Many farmers experience net losses in certain years due to market conditions, weather events, or significant capital expenditures. A net farm loss actually reduces your AGI, potentially making you more eligible for stimulus payments than if you had a profit. This is a common misconception – a loss doesn’t disqualify you; it can help qualify you by lowering your AGI.

How Farmers Can Claim Missing Stimulus Checks

If you were eligible for one or more stimulus checks but never received them, the primary method for claiming them now is through the Recovery Rebate Credit (RRC) on your federal income tax return.

The EIPs were essentially advance payments of the Recovery Rebate Credit. If you didn’t receive the advance, you can claim the full credit when you file your taxes for the relevant year.

1. For EIP 1 and EIP 2 (2020 Taxes):

   • You will need to file an original or amended Form 1040 for the 2020 tax year.
   • Look for the Recovery Rebate Credit line (typically on Schedule 3, Line 14, which then flows to Form 1040, Line 30).
   • The IRS will calculate the amount you are owed based on your 2020 AGI and the number of qualifying dependents you claimed on that return.
   • Important: If you already filed your 2020 return and did not claim the RRC (or received a partial payment), you may need to amend your 2020 return (Form 1040-X). However, for many, if you simply left the line blank, the IRS might have automatically calculated it when processing your return. It’s best to review your 2020 tax transcript first.

2. For EIP 3 (2021 Taxes):

   • You will need to file an original or amended Form 1040 for the 2021 tax year.
   • The Recovery Rebate Credit line for EIP 3 is on Form 1040, Line 30.
   • Again, the IRS will determine your eligibility and payment amount based on your 2021 AGI and dependents.
   • If you already filed your 2021 return and did not claim the RRC (or received a partial payment), you may need to amend your 2021 return (Form 1040-X).

What if I didn’t file taxes for those years?

This is particularly relevant for farmers who might have had very low net income or even a loss, and therefore weren’t required to file a tax return based on traditional income thresholds.

Even if you weren’t required to file, you MUST file a 2020 and/or 2021 tax return to claim the Recovery Rebate Credit. The IRS cannot issue these payments without a filed return that includes the RRC claim.

Key Steps for Non-Filers (or those who missed the RRC):

1. Gather Your Records: Collect all relevant farm income and expense records for 2020 and 2021. This includes sales receipts, expense invoices, depreciation schedules, and any other income statements (e.g., W-2s from off-farm jobs, 1099-MISC or 1099-NEC).
2. Determine Your AGI: Calculate your net farm profit or loss using Schedule F for each year. Combine this with any other income or adjustments to determine your AGI.
3. File Your Return:
   • You can use tax software, a tax professional, or potentially IRS Free File if your AGI is below the threshold.
   • Make sure you accurately report your income, dependents, and specifically claim the Recovery Rebate Credit on the correct line.
4. Check Your IRS Account: If you have an IRS online account, you can often view your previous tax transcripts and see if any stimulus payments were issued to you. This can help you determine if you’re truly missing a payment. Look for "Economic Impact Payment" entries.

Common Pitfalls and Special Considerations for Farmers

1. "My Gross Income Was Too High": As discussed, gross farm income is not AGI. Many farmers with high gross income have very modest net income after expenses and depreciation, making them eligible.
2. "I Took a Loss, So I Don’t Qualify": A net farm loss reduces your AGI, which can make you more likely to qualify for stimulus payments. You still need to file to claim the RRC.
3. Hobby Farm vs. Business Farm: The IRS distinguishes between a farm operated for profit and a hobby farm. Expenses from a hobby farm are generally only deductible up to the amount of income, and losses cannot offset other income. For stimulus purposes, the AGI calculation relies on your farm being treated as a business. If the IRS reclassifies your farm as a hobby, it could affect your AGI and thus your stimulus eligibility. Be prepared to demonstrate your intent to make a profit.
4. Self-Employment Tax Deduction: Farmers are typically subject to self-employment tax (Social Security and Medicare). You can deduct one-half of your self-employment tax when calculating your AGI. This is another important deduction that can lower your AGI and help you qualify for stimulus checks.
5. Depreciation: Depreciation on farm assets (equipment, barns, breeding livestock) is a significant non-cash expense that reduces your net farm profit and, consequently, your AGI. Ensure you’ve accurately accounted for all eligible depreciation.
6. Farm Program Payments: Payments from government farm programs (e.g., ARC/PLC, CRP, LDP) are generally considered taxable farm income and should be reported on Schedule F, contributing to your overall AGI calculation.
7. Changes in Circumstances: If your family situation changed between the tax year used for the initial payment and the year you’re filing for the RRC (e.g., a child was born, you got married/divorced), your eligibility or payment amount could change. The RRC calculation on your tax return will reflect your current situation for that tax year.
8. Off-Farm Income: Don’t forget to include any income from off-farm employment (W-2 wages) or other sources when calculating your AGI. This income, combined with your net farm profit/loss, determines your final AGI.

Actionable Steps for Farmers

1. Locate Past Tax Returns: Gather your 2019, 2020, and 2021 federal tax returns (Form 1040 and Schedule F).
2. Verify Stimulus Payments Received: Check your bank statements for deposits from the IRS or review your IRS online account (if you have one) for records of Economic Impact Payments.
3. Calculate Your AGI for 2020 and 2021:
   • If you already filed, look at your Form 1040, Line 11.
   • If you haven’t filed, use your farm records (income and expenses for Schedule F) and any other income/deduction information to calculate your AGI.
4. Determine Missing Payments: Compare the stimulus payments you should have received (based on your AGI and dependents for the relevant year) with what you actually received.
5. File or Amend Your Returns:
   • If you didn’t file: File your original 2020 and/or 2021 Form 1040, making sure to claim the Recovery Rebate Credit on the appropriate line.
   • If you filed but didn’t claim the RRC: File an amended return (Form 1040-X) for the relevant year, specifically adding or correcting the Recovery Rebate Credit.
6. Seek Professional Help: Farm taxes can be intricate. A qualified tax professional specializing in agricultural taxation can help ensure your Schedule F is accurate, your AGI is correctly calculated, and you claim all eligible credits, including the Recovery Rebate Credit. They can also advise on the nuances of farm losses, depreciation, and self-employment tax.

Conclusion

For many farmers, the unique financial cycles and tax reporting requirements mean that getting clarity on stimulus check eligibility isn’t as straightforward as for wage earners. However, the intent of the Economic Impact Payments was to provide broad relief, and farmers, regardless of the profitability of a specific year, were absolutely included.

By understanding how your net farm income (or loss) contributes to your Adjusted Gross Income, and by diligently filing or amending your 2020 and 2021 tax returns to claim the Recovery Rebate Credit, you can still receive the vital funds you were entitled to. Don’t leave money on the table – a little effort now can ensure you cultivate your full stimulus claim.