Nothing small about farmers' tax challenges
Record-keeping still the responsibility of farmers
Farming used to be considered small business, but even for small farms, that reality has changed. It is next to impossible to find farmers who feel comfortable filing their own taxes at the end of the year. Farming is big business and includes many variables that can affect the profitability of the enterprise.
Even a small farmer, by today’s standards, handles hundreds of thousands of dollars a year. Sometimes expenses are more than income or vice versa, but regardless, farmers look to tax professionals to keep track of things such as depreciation and capital gains to submit an accurate return.
Monte Stuchlik and Terry Vinduska and their sons operate S&V Family Farms, LLC, in northern Marion County. Rules and regulations change every year, and it takes a tax preparer to keep up with the changes and be compliant, Stuchlik said.
“The tax accountant is well-versed and educated on tax law and keeps you on the leading edge of what’s available and what you can or can’t do,” he said.
He added that individual farmers and their wives still spend a lot of time keeping records of their operations throughout the year.
A major part of a farmer’s 1040 return is Schedule F, Profit or Loss from Farming.
On it is recorded various sources of income and expenses incurred throughout the year. Subtracting expenses from income determines whether the operation has lost or made money that year.
Depreciation schedules allow farmers to recoup some of their investments in business property that wears out in time, such as machinery, equipment, purchased breeding animals, livestock facilities, and fencing.
Farmers rely on tax preparers to maintain records of those investments.
A business form records sales of assets that can result in capital gains, which are taxed at a lower rate than regular income.
Many other forms too numerous to mention are required as part of the filing process.
As Susan Hein put it, “taxes are too complicated to do it yourself.”
She and her husband, Rodney, farm near Hillsboro.