This year’s dip in commodity prices doesn’t mean you should lose sight of managing year-end income and expenses. Doing so can significantly impact your tax burden.
Although lower prices may have reduced your farm’s income, that income might be higher than you think. Did you take income from 2013 crop sales or delay income from those sales until 2014? If so, you might need to consider offsetting some of those dollars by spending some dollars before Jan. 1.
The basic management guideline is to avoid wide fluctuations in taxable income from year to year. Doing so helps ensure you benefit from available credits, which results in the lowest income tax.
Start by consulting your tax adviser to determine whether you might benefit by taking steps to even out your income. If your 2014 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, delay crop or livestock sales until January, and look for opportunities to increase expenses.
Even the small things add up. Retain and gather receipts from throughout the year for minor repairs and associated parts. Consider purchasing supplies you know you will need in 2015. Now is a good time to take inventory of shop supplies, such as tires, oil, lubricants and filters, and commonly used parts, including belts and bearings. Individually, none of these is a major expense, which offers flexibility for managing year-end expenditures.
After you visit with your tax adviser or accountant, stop by your local Case IH dealer. Our parts and service experts can help you anticipate maintenance and repair needs for 2015 and can help you identify the right items for your equipment. You also can visit the Case IH Parts Store, where you can save your equipment in a MyShed™ account; search for parts by model or by serial number; and find so much more.
Year-end tax planning is an important part of any successful business. By taking advantage of the options available, you can significantly boost your bottom line and Be Ready for 2015.