Farm Operations
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We Answer A Question Regarding Deducting Used Equipment!
One of our readers asked the following question: “If I purchase a (used) tractor by the end of this year what percentage will I be able to write off? “ This is one those questions where the answer is: IT DEPENDS. When purchasing a used tractor, the farmer must first decide if they want to […]
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Where Do We Deduct Our Health Insurance Premiums?!
One of our readers asked the following question: “Self employed health insurance deductions: does is apply to schedule F, schedule 1040 or both? Will I be able to deduct my health insurance on both my 1040 AND my schedule F or will I have an option of either schedule, or is it schedule F only […]
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Lower Income Farm Hands Lose Money on New Tax Bill!
The Tax Relief Act passed last week provided for a 2% reduction in the employee’s portion of the FICA tax. This dropped the tax rate from 6.2% to 4.2% for 2011 only. For individuals making more than $20,000 in salary or net farm income, this is an actual net tax decrease. However, for farm hands […]
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Do We Have To Do a 1099 on Feed Purchases?
One of our readers asked the following question: “I bought some high moisture corn from another farmer for feed in my feedlot. Do I have to send a 1099 to the farmer from which I purchased the corn? “ When a farmer purchases services from a non-incorporated taxpayer and those purchases total more than $600 […]
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A Trade-In Can Cost You $15,000 in Tax!
Many farmers mistakenly assume that if they have a used piece of farm machinery and they want to get a newer piece to replace it, that a trade-in always saves them money at tax time. However, in many cases, this is not true and in fact, can cost the farmer up to $15,000 in self-employment […]
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When is Land Rent Reported as Income?
We had a reader send in the following question: “We own farm land in Iowa. Last half rent has not yet been received though contract states last half to be received by landlord on December 1. If rent moneys are not received until January of 2011 is rent properly reported on tax return as 2010 […]
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Coordinate your Section 179 Deduction with Bonus Depreciation
With the large increase of Section 179 deduction for 2010 and 2011 to $500,000 and 50% bonus depreciation on new assets in 2010 and possibly 100% in 2011, it is now even more important for your tax planning to coordinate these two deductions. Here are the important rules to remember: Section 179 deduction is available […]
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A Deal is Struck on Tax Package
President Obama and the Republicans struck a deal yesterday on a extension of the Bush tax cuts for another two years along with many other “goodies”. If enacted, the deal will provide the following: Extension of the top tax rate of 35% for 2011 and 2012. Top capital gains and dividends tax rate of 15% […]
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When Do We Have to Issue 1099 or W2 to Relatives?
One of our readers wrote in the following question: “How much can I pay grandchildren without generating 1099 or w2 ?” This is a question that we seem to get periodically throughout the year and the answer depends on what type of services are being performed. If a grandparent (or parent) is having a grandchild […]
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IRS Announces 2011 Standard Mileage Rates
On Friday, the IRS published their standard mileage rates for 2011. These rates are used to calculate the deductible costs of operating an automobile for business, charitable, medical and moving purposes. The 2011 rates are: 51 cents per mile for business miles driven 14 cents per mile for charitable purposes 19 cents per mile for […]