Taxes & Benefits
DFAP Awards have now been mailed to recipients. If you applied and haven’t received an award or denial letter by August 6, 2024, please call the DFAP call center at 1-800-721-0970.
NOTE: Independent experts have shared information they have produced that may be helpful in understanding Federal tax and benefits requirements. USDA does not endorse information provided by outside parties, but is providing links to resources for your own consideration.
Everyone’s situation is different. Be sure to talk with an attorney or professional knowledgeable in these matters for specific advice. For more information call the DFAP Call Center at 1-800-721-0970.
Taxes
USDA cannot tell you if you will owe taxes, because everyone’s situation is different. USDA recommends that you speak with a tax professional about your own particular circumstances to be sure about what you might owe.
- Will I have to pay taxes on any DFAP financial assistance?1
Financial assistance received through this program is part of your 2024 gross income, for tax purposes, regardless of whether or when the payment is cashed or deposited. Individuals who get financial assistance will also get an IRS Form-1099 showing the amount of money they have received.
For some individuals, there may be a requirement to pay self-employment taxes, too. See https://www.irs.gov/newsroom/frequently-asked-questions-about-usdas-discrimination-financial-assistance-program.
More information on how DFAP financial assistance may affect your tax bill, including how to report the award and whether you have to pay self-employment tax, is available at https://extension.usu.edu/ruraltax/dfap, including:
- Video: Tax Strategies for Discrimination Financial Assistance Program (DFAP)
- Presentation: Taxation of USDA Discrimination Awards from the Inflation Reduction Act
- Extension Article: Taxability of USDA Discrimination Financial Assistance Program Awards Resulting from the Inflation Reduction Act of 2022
These resources are produced by independent tax experts outside USDA. NOTE: USDA does not officially endorse resources produced by independent experts, but they are provided for your consideration.
USDA cannot tell you if you will owe taxes, because every individual's circumstances are different. USDA recommends that you speak with a tax professional. USDA has partnered with Southern Extension Risk Management Education Center, the National Farm Income Tax Extension Committee and other tax experts across the country to provide general information resources regarding USDA program awards and agricultural taxes. These resources are available online at https://farmers.gov/taxes, https://ruraltax.org/, and https://agftap.org/.
- Is USDA pursuing a way to provide money for taxes owed on DFAP awards?
No. USDA has no current legal authority to pay the taxes on DFAP financial assistance. The law that created this financial assistance program - IRA Section 22007 - does not provide for payment of taxes by USDA.
Benefits2
Everyone’s situation is different. Be sure to talk to an attorney or advocate knowledgeable in these matters for specific advice. For more information call the DFAP Call Center at 1-800-721-0970.
- Will DFAP financial assistance affect my eligibility for other benefits?
Maybe.
- Your USDA DFAP award will NOT affect your eligibility for public benefits that have no income or asset tests—for example, most types of Medicare and Social Security.
- For public benefits that do have income or asset tests—for example, Supplemental Security Income (SSI), Medicaid, Supplemental Nutrition Assistance Program (SNAP) in some states, VA pension benefits, housing subsidies (e.g., Section 8 or other rent below market value), and others—your USDA DFAP award MAY affect eligibility. How much will depend on what benefits you get, your other income and assets, the amount of your DFAP award, and where you live.
- Where can I get more information about the impact on specific benefits, in my state?
- USDA has partnered with the National Health Law Program (NHeLP) and the National Legal Aid & Defender Association (NLADA) to provide information and guidance to DFAP recipients who receive public benefits.
- You can find much more information—including material about particular benefits programs and state-specific material—online at https://www.nlada.org/USDA-DFAP/award-recipients. NOTE: USDA does not officially endorse resources produced by independent experts, but they are provided for your consideration.
- Limited additional individualized assistance may be available, online or on the phone. You can call or email the DFAP Call Center to find out how to get more information. 1-800-721-0970, or info@22007apply.gov
- Do I need to report the USDA DFAP award to anyone?
If you or a household member receive benefits based on having limited income or assets, you should review the available information to ensure that you fully understand any applicable reporting requirements, including whether and when you are required to report income or assets, which may include the amount of the USDA DFAP award.
