Tax implications of EQIP funded forest management
We were approved for forest fire risk mitigation work cost sharing by EQIP/NRCS. I am concerned about tax liability. We are not a business. We just moved onto our property 5/1/26 (we have owned the property since 2019 and I submitted the application in 2020). From what I have read, they typically fund about 75%-90% of the eventual cost...I pay up front and they reimburse what they said they'd pay on a per acre basis. I then cite the work as an expense and the EQIP $ as income, and I am safe from taxation since expenses>income.
BUT we are not a farming business, so I am worried that we are not able to file a schedule F. Plus through 2027 I still have income from my job. I'm confused about how this all works with the IRS. Right now our state plus fed tax rate is 50%...