Most of the farmers that I deal with from an income tax filing standpoint try to file and pay their income taxes by March 1 of each year. This is primarily due to no estimated taxes needing to be paid during the tax year if the farmer files and pays by March 1. If they do not file by this date, than a penalty for not paying estimated taxes can be due.
Normally, a farmer will pay this estimated tax payment on January 15 for the previous year. For example, for calendar year 2009, the estimated tax payment for a farmer is due on January 15, 2010. This estimated tax payment can either be the tax paid in the previous year or 90% of the tax owed for this year.
Let suppose that for 2008, the farmer owed total income taxes of $5,000 and for 2009, they expect to owe $10,000. They are required to pay in on January 15, 2010 $5,000. Now if they only expect to pay $2,000 for 2009, then they only need to pay in $1,800.
Since farmers and other taxpayers get used to doing the same thing every year, if they are used to filing on March 1, they file on March 1. If they are used to paying estimates on January 15 and filing on April 15, that is what they do.
What they should do each year toward year-end is determine what works best for that year. If they owed very little tax for the previous year, it would probably make a lot more sense to make an estimated tax payment based upon the previous year’s tax and then just pay the tax on April 15. This will save both interest cost on the money owed and give the farmer and extra 45 days or so to get their tax return done.
Please make sure to check this out each year and determine what works best for you.Categories: Farm Taxes
Tags: Farmers Estimated Taxes