9 Tax Tips for Farmers
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Nine Tax Tips for Farmers
9 Tips to Help at Tax Time
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Crop Insurance Payments
• Insurance payments from Crop
Insurance and Crop Disaster
Support are considered income.
• Generally, you should report these
payments as income in the year
you received them.
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Weather-Related Sales
• Bad weather, such as drought or
flood, may force you to sell more
livestock than you normally would
in a year.
• If this is the case, you may be able to
postpone reporting a gain from the sale
of the extra animals.
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Sale of Items purchased for Resale
• You must report the sale of
livestock or other items you bought
for the specific purpose of resale.
• You may be able to deduct their
cost basis in the year of their sale.
• You may also deduct other
related costs such as sales tax and freight.
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Employee Salary
• You can deduct wages paid to your
farm’s full and part-time
employees.
• You are required to withhold Social
Security, Medicare and income
taxes from their wages.
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Farm Expenditure
• Farmers may deduct ordinary and
necessary expenditures as business
expenses.
• Ordinary and necessary expenses
are expenses that are considered a
common and accepted cost for the
business of farming.
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Loan Repayment
• You can only deduct the interest
paid on a loan if the proceeds
from the loan are used for your
farm.
• You cannot deduct interest paid
on a loan that you used for
personal expenses.
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Farm Income Averaging
• For tax purposes, you may be able
to average some or all of the
farm’s current year's income by
spreading it out over the last three
years.
• This may reduce your taxes if your
farm income is higher this year
than past three years.
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Fuel Tax Refund
• You may be able to claim a tax
refund or a tax credit for the
federal excise taxes paid on the
fuel you used on your farm or
for farm work.
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Operating Loss
• If your expenses are more than
income for the year, you may
have a net operating loss.
• You can carry that loss over to
other years and deduct it.
• In this way, you may receive a
refund of all or part of the income
tax you paid in previous years or even reduce your tax
liability in future years.
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To Learn More Visit
www.reliancetaxgroup.com Or Call
(877) 597-0153