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These Options Can Help Reduce Your Tax Burden

Estimate 2015 income and expenses now to avoid surprises come tax time.

As the year winds down, the window of opportunity to impact your farm’s year-end tax liability closes. Fortunately, there’s still time to make adjustments. The resulting peace of mind can make your New Year’s celebration much more enjoyable.

The basic management guideline is to avoid wide fluctuations in taxable income from year to year.1 This helps ensure you benefit from available credits, resulting in the lower income tax. And knowing where you stand today is much better than a Tax Day surprise.

Start by consulting your tax adviser to determine whether you might benefit by taking steps to even out your income. If your 2015 income needs a boost, consider making crop or livestock sales before year-end and delaying the purchase of supplies, such as seed, fertilizer, repairs, etc. In contrast, if you could benefit by reducing this year’s income, defer crop or livestock sales until 2016, and look for opportunities to pay for expenses this year.

Depending on your situation, increasing expenses through business-related purchases at year’s end can be a good option — especially for next year’s necessities or upgrades. Equipment purchases can provide valuable deductions via the Section 179 expense election. 2 Here are some options:

 

Take Action

If you’d like to encourage congress to consider legislation that will renew pro-growth federal tax provisions, including those important investment incentives like enhanced Section 179 expensing and bonus depreciation, visit the Case IH “Take Action” page. Here you’ll be able to send a pre-drafted email to your representative and senators urging them to act quickly to pass tax “extenders” legislation.

Year-end tax planning is an important annual business activity that can impact your finances long-term. But you must act before Jan. 1. Doing so can help put your operation in a better position heading into the new year.

*Case IH Certified Pre-Owned program applies to late-model (no more than five years old) (i) Axial-Flow® combines with fewer than 1,500 engine hours and (ii) Steiger® and Magnum™ tractors with fewer than 2,000 engine hours. See your authorized Case IH dealer for additional details.

RESOURCES
1NDSU Ag Communication. News Release. Ag Producers Should Do Income Tax Planning Before Year Ends. North Dakota State University Extension Service website. https://www.ag.ndsu.edu/news/newsreleases/2015/nov-30-2015/ag-producers-should-do-income-tax-planning-before-year-ends/view. Accessed December 7, 2015.
2CNH Industrial America LLC is not providing tax advice. All readers should consult their tax adviser for specific tax recommendations regarding equipment purchases.
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