← FarmCPA Home

Farmers Might Delay Higher Tax Rates for Three Years?

By: | Trackback URL | 2 Comments

December 20th, 2012

With all the talk about the possible higher tax rates starting next year we sometimes forget that farmers might not feel much of the hit due to farm income averaging. This special method of figuring tax allows you to average your tax over four years (2010-2013).

This means for 2013 you might be able to earn $1 million from farming and have most of it still subject to the old lower tax rates. This assumes you had no taxable income for 2010 to 2012. When this income is averaged over those years $250,000 would taxed using those tax rates for each year and for 2013 only $250,000 would be subject to those rates.

If they do keep the old rates for up to $250,000 the farmer has effectively had none of their $1 million subject to the new higher 39.4% rate.

This is a very unique situation, but in almost all cases a farmer will have less tax than other taxpayers due to farm income averaging.

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).

More Posts - Website

Follow Me:
Twitter

← FarmCPA Home

2 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts

Events

View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    Corn does well in Washington state. 55 at night 95 during the day plus irrigation 24 hours ago

    If average cash rents drop $50 this fall and cash return is 2% equals drop in average land values of $2,500. We shall see. 1 day ago

    2 years ago corn + beans + wheat was almost $40. Now it is under $20. 2 days ago

    Great time with @MRRChip today on Market Rally talking about the new farm bill. 3 days ago

    Drove over 2,000 miles in last 12 days. Saw a lot of good looking corn. Beans not so much 5 days ago

    When you drive through Minnesota, South Dakota and Iowa this time of year you see a lot of corn and beans and not much else 2 weeks ago

    Possible another reason for high US corn yield estimates is acres switched to beans were lower yield corn acres 2 weeks ago

    Don't understand why nobody claims the USDA manipulates the data when the report is bullish 2 weeks ago

    USDA pegged lower corn production but if yields trends continue this will quickly change to production increase. 2 weeks ago

    The soybean YO-YO is well underway 2 weeks ago