Farm Tax Updates

For those who own or manage farms: it's that time of year again to sit down with your tax preparer. Here's what's new for 2016:Section 179 expense deduction• Able to depreciate up to $500,000 of of qualifying property purchased in 2016• Limit of $500,000 was made permanent and will be indexed for inflation in future years• Total amount of equipment allowed before phase-out is $2,000,000.• This deduction cannot be used to reduce Federal Taxable income below $0.50% Bonus Depreciation• Able to depreciate 50% of equipment costs for 2016 and 2017.• Will be phased down to 40% in 2018 and 30% in 2019.1099-Misc due dates changed to January 31, 2017.If you choose to not make estimated tax payments, you must file your return by March 1, 2017. If you plan to make annual estimated payments by January 17, 2017, the return is not due until April 18, 2017.Additional tips to keep in mind:• Loss Carryback -- if the farm lost money this year, you can typically carry that loss back up to five years.• Additional deductions possible with items such as prepaid farm costs/supplies etc.• If Schedule F is projecting a loss, consult us to discuss impact on Self-Employment tax and options to reduce the impact.• Explore the option of deferred contract payments and timing of revenue recognition.Set up planning meetings soon to get an understanding of where your farm income is for the year. Don't hesitate to contact us at (217) 351-2000.