As many of us know, tax season can be a very stressful time for a farmer/rancher. There are purchases and sales throughout the year, capital expenditures, credits, and deductions… but how do you make all of this fit together when its time to file your taxes?
We have included some tips that farmers and ranchers should know from Credit Karma. To see the full list, check out their article linked below.
1. Know whether your farming activity counts.
Who does the IRS consider a farmer or rancher?
2. Know what you must claim as income.
As a farmer, you’re likely to have multiple streams of income, and there may be some income sources that you didn’t know you needed to report.
3. Know what expenses you can and can’t deduct.
Farmers get a lot of deductions for the expenses they incur, but that doesn’t mean you can deduct everything.
4. Take advantage of other tax breaks.
In addition to deducting your expenses, there may be other deductions and credits you can take as a farmer.
- Home office deduction
- Deducting net operating loss
- Claiming fuel credits
- Earned Income Tax Credit