Crop Insurance and Crop Disaster Payments - Agriculture Tax Tips
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You must include in income any crop insurance proceeds you receive as the result of crop damage. You generally include them in the year you receive them. Treat as crop insurance proceeds the crop disaster payments you receive from the federal government as the result of destruction or damage to crops, or the inability to plant crops because of drought, flood, or any other natural disaster.
Note: You can request income tax withholding from crop disaster payments you receive from the federal government. Use Form W-4V, Voluntary Withholding Request
. Refer to How to Get Tax Help in Publication 225 for information about ordering the form.
You May Choose To Postpone Reporting Until The Following Year
If you use the cash method of accounting and receive crop insurance proceeds in the same tax year in which the crops are damaged, you can choose to postpone reporting the proceeds as income until the following tax year. You can make this choice if you can show you would have included income from the damaged crops in any tax year following the year the damage occurred.
How To Postpone Reporting Of Crop Insurance Proceeds
To choose to postpone reporting crop insurance proceeds received in the current year, report the amount you received on line 6a of Schedule F
, but do not include it as a taxable amount on line 6b. Check the box on line 6d and attach a statement to your tax return. It must include your name and address and contain the following information:
Related Topics
Agriculture Tax Center
Page Last Reviewed or Updated: 29-Mar-2022
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