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Make An Tax Estimate Payment Now?

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January 5th, 2011

Most farmers know that if they file their income tax return by March 1 of each year and pay the tax with that filing, there is no estimated tax penalty associated with not paying any estimated taxes through out the year.

What many farmers may not know is that filing this early might be creating a record keeping problem for them.  These days, many of the form 1099′s needed to file an income tax return are not received until late in February and in many cases, several corrected form 1099s are mailed during March.  By filing on March 1, the farmer may end having to file an amended tax return and may get in such a hurry to get the return done, that many deductions might be missed.

One option is to pay their required income tax estimate due January 15, 2011.  If their income for 2009 was much smaller than 2010 or they expect their income for 2010 to be fairly minor, the required estimated tax payment is normally the lessor of:

  • 100% of the 2009 tax (if your income is high, this percentage may be higher), or
  • 90% of the estimated 2010 tax

By making this tax payment, the farmer is allowed until April 15, 2011 to file and pay the remaining tax that might be owed without incurring any estimated tax penalties.  With today’s low interest rates, the amount of foregone interest might be very minor in return for the extra time to get the return filed correctly.

Please check with your tax advisor to see if this would work for you.  You have 10 days to check it out.

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

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1 Comment

  • January 7, 2011 at 7:08 am

    Roth & Company, P.C.

    Is it smart for Farmers to file by March 1 to skip estimated payments?…

    Farmer-CPA Paul Neiffer isn’t so sure: These days, many of the form 1099′s needed to file an income tax return……

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