{"id":578,"date":"2018-06-28T17:19:21","date_gmt":"2018-06-28T17:19:21","guid":{"rendered":"http:\/\/agricultureloan.com\/?p=578"},"modified":"2018-06-28T17:07:53","modified_gmt":"2018-06-28T17:07:53","slug":"understanding-federal-farm-income-taxes-deductions","status":"publish","type":"post","link":"https:\/\/agricultureloan.com\/understanding-federal-farm-income-taxes-deductions\/","title":{"rendered":"Understanding Your Federal Farm Income Taxes and Deductions"},"content":{"rendered":"
If you own a farm, chances are that you have the ability to take advantages of many deductions on your tax returns. In order to do so, though, you\u2019ll need to keep proper records so that you adequately record your income and expenses at tax time.<\/p>\n
\nGet Matched with a Lender, Click Here.<\/a><\/p>\n First, you should know how the IRS defines a farmer. It\u2019s pretty basic \u2013 if you operate a farm with the intent to \nmake a profit<\/a>, you are a farmer. But, you must make farm include that you report on Schedule F in order to qualify. Basically, if you operate a farm, whether you own or lease the land, you may qualify as long as you do it for business purposes.<\/p>\n If you are a \u2018hobby farmer,\u2019 meaning your intent to farm is not to make a profit, you may take some deductions, but not all of them. The major difference here is that you report on your farm income as \u2018other income\u2019 on your 1040 \u2013 you do not complete Schedule F. You will also only be able to take deductions that are on Schedule A, rather than the more in-depth deductions farmers working for a profit can make.<\/p>\n In order to determine the difference, the IRS looks back at the last 5 years. If at least 3 of those years included farming profit, you qualify as a farmer.<\/p>\n \nClick to See the Latest Mortgage Rates.<\/a><\/p>\n Knowing the expenses you can deduct will help you minimize your tax liability and hopefully increase your farming profits. A few of the most common expenses you can write off include:<\/p>\n Since you are not working for someone, but rather work for yourself, you are responsible for both sides of the income tax. Otherwise known as \nself-employment tax<\/a>, this covers your portion of the social security and Medicare tax that an employer would otherwise have paid for you.<\/p>\n By paying the self-employment tax, you cover your portion of the social security tax, which makes you eligible for social security income in the future. It will also help you become eligible for Medicare benefits when you are 65-years old.<\/p>\n In order to take any of the above deductions or to accurately report your income, you need careful bookkeeping records. Whether you handle it yourself or you hire someone, you need ledgers that show every transaction for both income and expenses.<\/p>\n If you plan to take any deductions, you will need ample receipts to prove the expenses. You will also need proof of your income to show that you are accurately reporting it. As a general rule, you should keep all documents for at least three years in the event that the IRS has any questions on your returns.<\/p>\n Making the most of your farm deductions will help lower your tax liability and increase your profits. Keep careful records and ensure that you take the deductions that you are owed to make your farming venture as successful as possible.<\/p>\n \nClick Here to Get Matched With a Lender.<\/span><\/a><\/p>\n","protected":false},"excerpt":{"rendered":" If you own a farm, chances are that you have the ability to take advantages of many deductions on your tax returns. In order to do… Read More<\/a><\/p>\n","protected":false},"author":12,"featured_media":645,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[192,166,150],"tags":[273,272,271],"yoast_head":"\nWho Qualifies for Farm Deductions?<\/h2>\n
What Can you Deduct?<\/h2>\n
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What is Self-Employment Taxes?<\/h2>\n
Keep Careful Records<\/h2>\n