COUNTY AG NEWS
Farmers and non-farmers should look at year-end tax management as a way of reducing their year-end tax liabilities. This may include the purchasing of or delaying the purchasing of supplies for the coming year. It could include increasing sales in the current year or delaying sales until after the January 1 of next year. It may also include making tax-deductible donations.
Every year farm producers see a variation in income due to changing prices for what they produce and for the cost of inputs they must purchase. Market prices are now considerably lower than they were a couple years ago for most of our farm products. Some producers locked in grain prices when they were at high levels.
This drop in market prices will significantly affect the year-end income of most producers. In order to effectively manage what you pay after filling out all of your tax forms you need to know where you are as far as income and expenses. This means a producer should be sitting down now to do an estimate of income and expenses.
If a producer is in the high-income area there are ways to manage that income to reduce the overall year-to-year tax liability. Some of these options are; purchasing supplies and inputs needed in 2016 before the end of 2015, paying children for work they do around the farm, and maintaining receipts for all farm related expenses.
The Economic Stimulus Act (ESA) of 2008 has provided additional options for producers who purchase either new or used equipment or property. During the last two years some parts of this Act such as the Section 179 expensing provision have faced significant reductions.