![]() ![]() You might find that the rather complicated mathematics results in a more even average over three years but that it doesn't necessarily prevent you from reaching a higher bracket. And while it sounds easy, you can probably imagine that it involves some pretty strict requirements - and it doesn't always mean you get the lower bracket that year. That'll (theoretically) shift you to a lower tax bracket, which of course considerably helps your tax bill. If you make a lot more one year, you can actually shift some of your income to lower income years. This provision is designed to give farmers who've had a bumper year a fair tax rate if they have suffered losses in the previous years. This is one of the coolest exceptions that farmers can make on their taxes - a way of determining an average tax rate based on three years of income. ![]() You can even write off the cost of fertilizer or lime - and the costs of applying them. For instance, if you prepaid for any supplies during the year and didn't end up using them, you can write them off. The IRS has a list of deductible farming expenses, and it's quite detailed and varied. For that reason, it's really important you familiarize yourself with as many expense deductions as you can, lest you miss out on a sweet tax write-off. Of course, you'd need records and receipts for all of them as well.Īs a farmer, you can claim expenses as part of your normal and ordinary farming practice, and you don't have to meet a certain dollar value: The more you have, the better. When itemizing, you have to have enough deductions to equal at least 2 percent of your adjusted gross income - and at that point, you'd need enough of them to beat the standard deduction. It might not sound like that big of a deal, but it can sure help you out. Unlike most people - who generally have to make the choice between itemizing all their deductions or taking the standard deduction - those who run a farming business can take some deductions as business expenses without having to itemize. ![]()
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