Farmers Encouraged To Review Tax Documents Before Tuesday
March 1st is a big day for the farming community when it comes to taxes. Agricultural Tax Professor Roger McEowen said your documents should be completed, so now is a good time to review your documents to make sure everything is correct.
"Did you properly claim all of the farm related deductions you are entitled to and can substantiate? If you weren't able to deduct the amount of prepaid expenses that you were anticipating because of a lack of supply or high cost of inputs might have limited you in doing so, then you might want to consider making a farm income averaging election. If you purchased equipment and it was ready and available for use in 2021, did you claim the amount of depreciation that is optimal from a tax planning standpoint? Remember, 100% bonus depreciation may not be available after 2022.”
McEowen added the key is to make sure your tax planning is in line with your management goals.
“Well, the answer is largely tied to what happens in the farm economy and how it impacts a particular farm or ranch operation. Every situation is unique," McEowen noted. "The key is to make sure your tax planning fits within your overall management goals and objectives and improves the bottom line. That may mean accelerating deductions and pushing income into the next tax year or it could mean the opposite. It might also mean that the timing of asset purchases matters. In any event, it's imperative to stay connected to your tax professional.”
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