On the last day of 2009, farmers across the nation are reflecting on the year. The reflection could be including the purchases, expenses and taxes for the year. Just because 2009 is coming to an end, doesn't mean that farmers can't be keeping their 2010 taxes in mind as they make decisions starting the first of the year.
Once January hits, farmers are really limited in the tax planning process, says C. Robert Holcomb, EA extension educator with Minnesota Extension. Fast-write offs for purchases up to $250,000 are an option for farmers on the 2009 taxes.
The purchases that can be written-off in the tax year of purchase rather than after they've depreciated over their life, according to bankrate.com, are:
- Machinery and equipment
- Furniture and fixtures
- Most storage facilities
- Single-purpose agricultural or horticultural structures
It's extremely important to have taxes together before the first of the year, Holcomb says. The taxes are pretty much locked in for 2009, but farmers can play with the section 179 expenses write-offs mentioned above and some minor elections with tax returns after Jan. 1, 2010. As far as the 2010 year goes, farmers can be thinking ahead to the next tax season about these expenses among others to make effective tax decisions for the New Year.
Tax planning for 2009 is "getting into the short rows,” Holcomb says. If farmers need more income between now and the end of the year, they can sell more commodities, but majority of the tax options for farmers will run out after the New Year begins, he says. That doesn't mean farmers' can't make New Year's resolutions for their 2010 taxes.