The experienced professionals at Edge Financial are your resource for the latest and greatest news, tips, and information for all things tax.
Farming Q & A
Did you receive any payout from crop insurance policies?
If the answer is yes, then this may be considered income! You will need to account for this amount on your tax return. If you do not, you will be hit with a big accuracy penalty in addition to being taxed on the money itself.
What Can I deduct?
EVERYTHING you paid out to run and maintain the farm. Think..
Did you pay any vets for animal care such as cattle?
Did you have to pay for parts to fix that tractor?
Were there any traveling expenses to obtain tools, feed or other necessary items?
Did you hire anyone to give a helping hand on the farm?
Employees Vs. Hired help
It is very important that you identify properly weather you hired an employee or just a contractor. Indicating the wrong thing can have big taxing issues. Answer the next few questions for proper categorizing.
Do you dictate a work schedule?
Do you determine what and how you will pay them?
Is this a temporary or causal job that needs to be done?
Did you pay Social Security and Medicare on the wages you paid them?
Do you have live stock? If yes consider these expenses for deductions
Initial Purchase price
Cost to transport
Cost to care for
What am I to do with these big loans I am paying on for my equipment?
You cannot deduct the loan itself, but the interest you are paying is deductible. Sure eases the burden of the money that you are paying the bank!
This year my farm cost me more than I made!
This is called an Operating Loss. You may carry this forward into the next year and it may off-set a bi g profit the following year.