Tax Planning for Producers Receiving Debt Relief
IRA 22006 Tax Information
Direct loan borrowers who received Section 22006 assistance in 2022 will soon receive a set of revised tax documents and a letter explaining the revised forms. This letter will notify the borrower of options available to avoid or alleviate any tax burden incurred due to receiving that financial assistance. (If you also have received assistance as a Guaranteed Loan borrower, it is not part of this reclassification and will still be reflected on your Form 1099-G).
If you are a farmer who received financial assistance in 2022 from the Farm Service Agency (FSA) under Section 22006 of the IRA you should expect to receive two separate tax information forms:
a Form 1099-C, Cancellation of Debt
a Corrected Form 1099-G, Certain Government Payments
Depending upon your circumstances, the IRA payment reported on your new Form 1099-C may be excluded from your income. Consult with a tax professional for assistance in understanding whether this change will affect your 2022 tax return.
Here is the latest announcement from FSA explaining the next steps: Changes in Tax Reporting for 2022 Payments Received Under Inflation Reduction Act of 2022 Section 22006
Please watch this in-depth video explaining qualifications: Taxes for 2022 Inflation Reduction Act Section 22006 Recipients
For more information from USDA visit: Inflation Reduction Act Assistance for Distressed Borrowers
