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Taxes on Subsidy

Letter from an Agent:

I am preparing income tax for an agent. he keeps saying the subsidy is not taxable yet farmers put it on the 1099 making me believe it is income and thus should be treated as such. can anyone tell me if it is or is not taxable. and if it is not where did you write it off on your income tax.

 

Moderator: Subsidy when you are in the Career Program should just count as a loan. So it shouldnt be any kind of tax event. If you make the Run to Daylight numbers in the Full Time Agent cycle and the subsidy gets waved, each portion that becomes waved over the 3 year time span will become income for the amount that is waived.

If subsidy isnt waived, then its just considered a loan payback. Just like if you got a car loan, the bank couldnt report the loan as a 1099. However if the bank decided to waive a portion of the loan balance, then it is income because it is money given to you in some way shape or form.

That said, I want to make sure you know that this advice isnt from a CPA so it cant be used as gospel. Hope this helps!

 

 

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