Tax Help MD has created a farmers tax guide and is sharing tips and advice to farmers about the importance of early action financial planning. Income from farming can be highly unpredictable and because of this it is important to make income projections early and to prepare for taxes well before the majority of Americans begin to think of their tax returns, according to Tax Help MD. When considering the limited-time-only section 179 deduction, there are five tax tips for farmers that should be implemented now rather than later.
The section 179 deduction is a deduction that allows farmers that gross under $400,000 a year to depreciate up to $108,000 of the cost of newly bought equipment in the first year. In 2013, with the “American Taxpayer Relief Act,” this deduction goes even further by allowing farmers to write-off $500,000 of qualified capital expenditures. Small businesses that are not profitable in 2013 can also use a 50% Bonus Depreciation created for bigger businesses that exceed the $200,000 write-off cap to write-off new equipment and carry-forward the loss to future years.
The Fiscal Cliff legislation extended this deduction for the 2013 tax year, but the IRS tax resolution experts at Tax Help MD are warning farmers that this helpful deduction will most likely not be available for long. The deduction is slated for a decrease in 2014, and therefore Tax Help MD is advising farmers to purchase needed equipment this year before it’s too late.
Additionally, Tax Help MD’s income tax service has put together a list of 5 tax tips that every farmer should read:
- Buy Needed Equipment – While farmers should avoid buying equipment solely for the tax deduction, it is better to spend money on needed equipment than to hand it over to Uncle Sam.
- Don’t file as a hobby farm. Be a business. – Filing your farm as a business has certain requirements, but most of these are not difficult to meet. Some of the factors the IRS takes into consideration is the time and effort you spend on the farm, whether or not you depend on the farm’s income for your livelihood, if you have good record keeping, and what experience you bring to farming.
- Keep records! – One of the most important rules for tax filing is keeping good records. Farmers should use a tools to keep good financial records and save all of their receipts.
- Monitor taxes – Steps can be taken to prevent most tax problems if they are caught early enough. Farmers should take a look at their taxes at least every 3 months to make sure they are on the right track and aren’t going to have any big surprises when they file.
- Take Farm-Related Tax Deductions Wherever Possible. – All farmers should remember that their farm is a business. It would be beneficial for all farmers to take a look at deductions that small businesses often take advantage of to get ideas of the kinds of deductions that would be applicable for farming expenses.
The most important tax tip for farmers from Tax Help MD is to talk to a tax expert. The earlier a farmer talks to someone that understands the subtleties in the tax code that exist for small business farmers, the easier it will be to avoid any future tax problems and to boost the farm’s bottom line.
Looking for a Tax Help? My Tax Help MD is a professional tax resolution providing platform that can provide you meaningful IRS tax resolution services. We have helped many Americans in dealing with their tax filing and payments. If you have a busy schedule or you can’t handle the process required for your tax file, you better consult us to get the things done in a professional manner for you. We provide the best IRS audit help in the United States.