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IRS clarifies tax information for USDA discrimination program inquiries.

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IRS Offers Guidance on USDA Discrimination Program

TLDR:

  • IRS and Treasury issue FAQ on USDA Discrimination Financial Assistance Program
  • Participants may need to include financial assistance payments in gross income for tax purposes and can deduct attorney fees

The Internal Revenue Service and the Treasury Department recently provided answers to frequently asked questions regarding the U.S. Department of Agriculture’s Discrimination Financial Assistance Program, which aims to assist farmers, ranchers, and forest landowners who faced discrimination in farm lending by the USDA before 2021.

To be eligible for this program, individuals must have experienced discrimination in USDA farm lending or have farm-lending debt that was associated with discrimination. The program covers various forms of discrimination, including race, color, national origin, sex, sexual orientation, religion, age, marital status, disability, and reprisal for civil rights activity.

The FAQ addresses important topics such as the inclusion of financial assistance payments in gross income for federal tax purposes, the deductibility of attorney fees paid to apply for financial assistance, and the potential self-employment tax implications of receiving financial assistance payments.

It is essential for participants in the program to understand how these payments may impact their tax obligations and take appropriate steps to comply with IRS regulations.


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