What this line means
An adjustment for Conservation Reserve Program (CRP) payments if you receive Social Security retirement or disability benefits. CRP payments are normally subject to self-employment tax, but Congress carved out an exception for people already receiving Social Security. If you qualify, you subtract your CRP payments here so they are excluded from your SE tax calculation. Enter the amount as a negative number.
Does this apply to you?
- You received CRP payments from the USDA during the tax year
- You are currently receiving Social Security retirement benefits
- You are currently receiving Social Security disability benefits
- You enrolled land in the Conservation Reserve Program and received annual rental payments
Easy to overlook
The CRP exclusion only applies if you receive Social Security benefits If you are under 62 and not receiving Social Security disability, your CRP payments remain fully subject to SE tax. The exclusion is specifically for individuals already collecting Social Security retirement or disability. A farmer age 55 with CRP payments cannot use line 1b — those payments stay in the SE tax base through line 1a. 1 IRS Schedule SE instructions — Line 1b
CRP payments are reported on Schedule F even when excluded from SE tax The CRP exclusion on line 1b does not remove the payments from your income tax. You still report CRP payments as farm income on Schedule F. Line 1b only removes them from the self-employment tax calculation. Skipping the Schedule F reporting because you “already excluded them” on Schedule SE leaves farm income unreported for income tax purposes. 2 IRS Publication 225 — Farmer’s Tax Guide
Watch out for this
Entering a positive number on line 1b. This line is a subtraction — enter the CRP amount as a negative so it reduces your combined earnings on line 3. Entering a positive number adds CRP payments twice: once through line 1a (where they are included in Schedule F income) and again here, doubling the SE tax on those payments.
Footnotes
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IRS Schedule SE (Form 1040) Instructions, Line 1b. https://www.irs.gov/instructions/i1040sse ↩
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IRS Publication 225, Farmer’s Tax Guide, Conservation Reserve Program. https://www.irs.gov/pub/irs-pdf/p225.pdf ↩