Farm Tax Planning

Recently, a few BRSW CPAs attended a Farm Tax Update course in Indianapolis. We wanted to remind our farm clients that there are lots of opportunities for farm tax planning, including the following:

  • Using commodity wages to pay family members
  • Paying wages to children under the age of 18 who provide services to the farm are not subject to FICA, they are deductible to the parents, and they are tax free to the child up to their standard deduction. Paying your children can also allow them to contribute to a Roth IRA.
  • A cash method farmer can donate raised commodities to a charity.
  • A cash method farmer can also elect to defer reporting crop insurance proceeds from the year of damage to the following year.
  • Farm corporations can provide tax free fringe benefits of meals and lodging to their employees if the arrangement is necessary for the business reasons of the employer.
  • Using spousal rental agreements to reduce self employment tax.
  • For employers who hire employees from Van Wert and Paulding counties, remember to submit information on your new hires to qualify for the Work Opportunity Tax Credit (WOTC).

If you have farm tax planning questions, be sure to contact your CPA and we will be glad to help you.

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