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October 16, 2016
actual appointments may be scheduled.
Fees are to be collected …
September 1, 2024
2024 Ag Lenders Conference Presentations
to report farm income◦ Schedule F – Farm income◦ Form … included in expenses on Schedule F)◦Schedule SE – Self-employment tax◦ … health insurance deduction◦ Schedule J – Income averaging◦ …
February 18, 2013
Risk Management Strategies
will find time in your busy schedule to attend this workshop …
July 5, 2022
Ag Law Issues
gain to the shareholder (on Schedule K-1), results in
only one … since the pass-through gain (Schedule K-1) to the estate/heirs … to all shareholders (via Schedule K-1) based on their percentage …
September 3, 2017
Section 1: Program and Procedures
FinPack.
Information needed to schedule a mediation.
When you are …
October 15, 2018
KFMA Newsletters
The TCJA implements several significant—even structural—changes to the tax code. Included among these are the
elimination of personal exemptions, the substantial increase (near‐doubling) of standard deductions, an expansion of
the child tax credit (in amount, refundable portion, and income limits), creation of a new 20% “Qualified Business
Income” (QBI) deduction, and extensive changes in depreciation rules for farmers. Add in tax rate changes and many
more modifications not mentioned here and you can see why TCJA is being described as the most sweeping tax bill
passed by Congress in the last 30 years. (For a detailed dissection of TCJA, see “Tax Cuts and Jobs Act” by Mark Dikeman
in the March 2018 KFMA Newsletter.)
Before discussing the usage of some of the tools TCJA gives us to manage tax, a brief review of the concept of tax
management would be helpful. Put concisely, tax management should attempt to remove the upper income from very
good years, raise the troughs of very poor years, and align taxable income levels from year to year. Recall that not only
income tax should be managed, but also self‐employment tax (Social Security and Medicare taxes for self‐employed
individuals). Also remember that Social Security benefits are based upon the level of income on which self‐employment
taxes are paid over the working life of the individual. The 35 highest earning years (after accounting for inflation) are
used to determine the Social Security retirement‐related benefit. Intuitively, managing taxes in such a manner as to
simply reduce the net income reported on the tax return each year—and therefore the taxes paid—to as low a value as
possible is not an efficient tax management method. Net return after taxes is a much more important measure than
taxes paid. Also, as returns to agriculture are by nature volatile over time, it is vital to implement tax management with
a multi‐year mindset. That is, recognize that decisions made regarding the current income tax year directly affect future
years as well (and not just the following year, either). Tax management should be implemented with an eye toward
using the tax attributes you have available in the most efficient manner possible over multiple years. Manage your tax
tools and attributes (deductions, deferrals, flexible depreciation rules, prepays, etc.) like you would your farm assets.
Use them efficiently, do not waste them, and definitely do not allow the process of tax management to alter the
enterprises on your farm or ranch, or how you get things done.
In a lower income year, techniques employed to manage taxes are used very differently than they are in high income
years. Be prepared for a different mindset concerning tax management this year if you are working through a low
income 2018. Instead of advancing expenses into the current year, deferring income into the following year, or
aggressively electing to deduct additional depreciation from machinery purchases via Section 179, you may be
http://www.agmanager.info/kfma/ September 2018 E‐newsletter 3
employing the opposite techniques in order to prop up this year’s taxable income to a level similar to your recent past
levels. In low income years, avoiding an overall loss of the tax return (a net operating loss, or NOL) is nearly always
advisable, if possible. It is true that NOL’s can be carried forward and utilized in future years, but in doing so some
deductions are often lost and the NOL does not reduce any self‐employment tax in the years to which it is carried. Also,
attempting to fill the lower income tax brackets that you have traditionally filled is often beneficial. Remember, you will
not receive a wider bottom tax bracket next year just because you didn’t fill the current year’s bottom bracket.
One of the areas of significant change brought on by TCJA is that of depreciation. These changes result in most farm
machinery being depreciated in more of a frontloaded manner and sometimes even over a shorter depreciable life. (See
“New Depreciation Rules” by Amy Boline and Chelsea Fullerton in this issue of the KFMA newsletter for a complete
breakdown of these depreciation changes.) In a low‐income year, it is helpful to review significant repairs made and
supplies purchased to determine if any of these expenses should be capitalized instead of immediately deducted as
repairs or supplies. Doing so gives you options. You can accelerate all or a portion of the purchase via Section 179 if the
expense is necessary in the end to manage your tax situation, but you can instead leave the item on your depreciation
schedule, effectively pushing deduc …
September 21, 2023
2025 Livestock Budgets
the last 3 years of your Schedule F tax return and use an average … example, farm utilities on the Schedule F can be averaged for the …
October 25, 2012
Risk Management Strategies
will find time in your busy schedule to attend one of these
workshops …
April 6, 2018
KFMA Newsletters
4
Standard Deduction
The standard deduction was increased to $24,000 for married taxpayers and to $12,000 for single taxpayers for tax years
2018 to 2025. This will decrease taxable income by $11,000 for a married couple ($5,500 for a single taxpayer) when
compared to the old law. This increase will make it more difficult for a taxpayer to itemize deductions. See line 40 of
your 2017 Form 1040.
Itemized Deductions
In addition to the increase in the standard deduction (which makes itemizing deductions much more difficult under the
TCJA), several significant changes were made to itemized deductions for tax years 2018 through 2025.
The change that seems to have generated the most discussion (and confusion) is the $10,000 limit on deductions for
home real estate tax, non‐farm personal property tax, and state income tax or local sales tax. See lines 5‐8 on your 2017
Schedule A (if applicable). This …