Farm Taxes
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The Two Week Check List
There are officially two weeks until April 15 to get your taxes filed (unless you elect an extension). If you have not filed yet, here is a check list of things to do between now and then: Fully fund IRAs for you and your spouse. Fund your retirement plan (KEOGH, SEP, SIMPLE). Even if you […]
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You Can Always Do An IRA!
About 20 years ago Congress passed a law that still provides confusion to both taxpayers and many members of the media. Many people thought the new law outlawed IRA contributions if you were covered by a retirement plan at work. Assuming you have sufficient compensation or self-employment earnings, the law simply disallowed the deduction if […]
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Heads They Win – Tails You Lose
This is the first year of the new .9% increase in Medicare tax based on earned income being higher than a threshold amount ($200,000 single/$250,000 married). If your wages exceed the threshold amount the extra Medicare tax will be withheld by the employer. Earned income includes both wages and net earnings from being a self-employed farmer. […]
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Don’t Forget Farm Income Averaging
Just a reminder if your income is dramatically higher this year, remember to consider using farm income averaging. Even if it does not reduce your income tax for the year, if may help you reduce your income tax in 2013 or beyond. In brief, farm income averaging allows you to elect to spread a certain […]
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Will Large Farmers Be Able to Use Cash Method in the Future?!
One of the advantages that all farmers (other than some farm “syndicates” and related entities) have is that they are allowed to use the cash method of accounting. This method is allowed whether you are a sole proprietor, partnership, corporation or LLC. Additionally, there is no limit based on the sales of the entity. This may change if […]
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When Congress Says “Simplified” Watch Out!
WARNING – THIS IS MY LONGEST POST EVER The House Ways and Means Committee just issued a proposal to “simplify” the treatment of small business (including most of our farmers). I will attempt to summarize it: Core Changes: Permanently expanding Section 179 from the current $25,000 level (for 2014) to $250,000 with a phase-out starting […]
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Update to Social Security Post
Just a couple of items to add to our Social Security Post of yesterday. First, if the farmer’s spouse works outside of the farm and has made a substantial amount of money during their career, then it may not make sense for the farmer to pay any more into the system. A retired person is […]
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When It Pays to Increase Your Earnings
We get this question from farmers approaching retirement age a lot: “I have had very low income for most of my career and should I try to maximize my income as I approach retirement to increase my social security benefits” Chris Hesse, who is one of my partners at CliftonLarsonAllen, LLP had provided me with […]
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What Are W2 Wages for DPAD?
One of the bigger deductions that farmers qualify for is the Domestic Production Activities Deduction (DPAD). In brief, the farmer is allowed to deduct 9% of their net farm income (in some cases this may be very limited if all of the farm products are sold through a cooperative). This 9% deduction has a limit […]
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IRS Announces They Are Processing All Remaining Tax Forms
The IRS announced today that they are now accepting all 2012 related tax forms. Since it seems like we have had 100s of tax returns backing up in our office waiting for this announcement, this is welcome relief for CPAs and other tax preparers. One of the negatives we are now certain to get multiple […]