Latest Farming News: End Of Year Tax Prep

Latest Farming News: End Of Year Tax Prep

Right now, with the harvest behind us, the latest farming news is all about getting ready for end of year tax preparation. The farming tax category is a broad one, encompassing a large and diverse range of markets. Plantations, orchards, and ranches all fall within the farming category. If you earn money growing produce or raising livestock, fish, and/or poultry, you are in the farming business and need to file your taxes accordingly.

Go into the tax process armed with a few important tips about farm income and expenses. Here are a few vital pieces of information:

Crop Insurance

Proceeds from crop damage often constitute income. If you've received payments from your insurance provider for crop damage, you should be ready to claim that money in your taxes.

Expense Deductions

Ordinary and necessary expenses on your farm or ranch are considered business expenses. When categorizing these expenses consider if 1) the expense is something related to running your farm and 2) it's a necessary and appropriate expenditure.

Employee/Hired Help Costs

Farmers are able to claim the cost of hiring help to run their farms. The employee expenses paid must be reasonable. Also, you need to show evidence of withholding Social Security, income taxes and Medicare to be able to claim the payments.

Loan Repayment

Interest paid on loans is only deductible if the loan is used to pay for your farming business expenses. Interest paid on loans for personal expenditures cannot be claimed. Be prepared to show evidence of how the loan was used in case of an audit.

Road & Fuel Use

You may be surprised to learn you might be able to get a tax credit or refund for fuel used on your farm for farm-related work.

Weather-Related Transactions

Inclement weather can have a significant impact on your farming business, often forcing you to sell more livestock or poultry than you would otherwise. If this has occurred, you may be eligible to seek a postponement on reporting any gains.

Net Operating Losses

If you've experienced more deductible expenses than income, you may have to report a net operating loss. A net operating loss may be carried over to other years and may result in a refund of income taxes paid in previous years.

Visit Farm2Ranch.com often for the latest farming news and updates!

Back to Blog

Comments

Post a comment
Farm2Ranch406 Stevens Street, Iowa Falls, IA 50126 • Tel: (800) 442-3276 • Email: info@farm2ranch.com