Farmers have several opportunities to reduce their taxes if they keep good records and carefully track their expenses. The tax savings can save them approximately 30% or more off their taxes paid. Some of the most commonly missed items are:
1. Failure to take advantage of accelerated depreciation on farm equipment purchased. Using these methods the farmer can write off the full value of the equipment purchased in the first year. A substantial tax break.
2. Conservation expenses are an area of significant tax savings which include expenses such as land leveling and drainage work.
3. Tenant living expenses for hired labor
4. Home office expenses
5. Costs of cell phones, and vehicle expenses.
6. Retirement plans. You can set us a Simple IRA or a SEP account, deduct these amounts against your taxable income and build a retirement plan for your future
7. Farm lease payments
8. Farm insurance payments
9. Maintenance and repairs
10. Other commonly missed expenses:
– Legal fees
– Crop scouting
– Dues to co-ops
– Hired labor
– Interest on loans
– Tax preparation, bookkeeping and advice.
Our Firm works exclusively with farmers, as their bookkeeper and tax experts. Please feel free to call for a free consultation at Maxwell CPA at 870.364.8992 or visit our website at www.farming-cpa.com