Nine Tax Tips for Farmers

9 Tips to Help at Tax Time

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.

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.

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.

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.

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.

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.

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.

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.

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.

To Learn More Visit

www.reliancetaxgroup.com Or Call

(877) 597-0153