10 Tax Tips For Farming

One thing sure to make the muscles in your neck stiffen is just saying the words, tax time. But as we roll into the second month of 2017 it's time to prepare for the preparation. You know, gathering the information we need to give someone else so they can figure it out. Bonnie Collins with Cornell Cooperative Extension shares ten things you should be trying to find.

1. Crop insurance. Insurance payments from crop damage count as
income.
2. Sale of items purchased for resale. If you sold livestock or items that
you bought for resale, you must report the sale whether it's profit or loss.
3. Weather-related sales. Bad weather may force you to sell more livestock than you normally would in a year. You may defer tax on the gain from the sale of the extra
animals.
4. Farm expenses. Farmers can deduct ordinary and necessary expenses they paid for their business. .
5. Employee wages. You can deduct wages you paid to your farm’s full and part-time workers. You must withhold Social Security, Medicare and income taxes from their wages.
6. Loan repayment. You can deduct the interest you paid on a loan if it's used for your farming business.
7. Net operating losses. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid in prior years.
8. Farm income averaging. You may be able to average some or all of the current year’s farm income by spreading it out over the past three years.
9. Tax credit or refund. You may be able to claim a tax credit or refund of excise taxes you paid on fuel used on your farm for farming purposes.
10. Farmers Tax Guide. This publication explains in more detail about expenses, income, record keeping and more. It's available online.