Tax Changes Impact Farms and Families
Avoid costly mistakes and learn how the changes affect you.
Changes in federal depreciation rules will benefit farmers, says Gary Hachfeld, University of Minnesota Extension farm tax specialist.
Many of the rules were extended, allowing greater depreciation amounts. Personal income tax rates for high-income taxpayers were increased at the federal level and in Minnesota. Federal and capital gains tax rates were modified, keeping the 5% and 15% levels but adding a 20% level for taxpayers in the 39.6% income tax bracket.
Federal estate and gift tax exclusion amounts were increased. The estate exclusion amount will be $5,250,000 for 2013 and indexed for inflation. The annual gift exclusion amount will be $14,000 per person in 2013. The life-time gift exclusion amount will be $5,250,000.
In Minnesota, the state legislature clarified several points of the Qualified Small Business Property and Qualified Farm Property Exclusion, making it easier for farm families to qualify. The state also initiated a new state gift tax with an annual exclusion of $14,000 per person and a lifetime exclusion amount of $1,000,000.
These are only a few of the many changes that were made for 2013. Hachfeld advises farmers to talk with their accountant and attorney to better understand these changes.
Equipment Companies Optimistic
Globally, farm equipment remains a very positive business, and short-term growth expectations are dominant in all regions, according to the Agritech Business Barometer.
The survey finds that the majority of Japanese manufacturers have a positive outlook on the market. The boom in the Indian and Brazilian markets was confirmed.
Additionally, half of the U.S. companies surveyed expect to see sales grow in the next six months, while the rest expect to at least maintain the high level reached in the prior year. However, more cautious voices come from Europe, where some markets are declining.
"While the overall business remains positive, we have seen fluctuations in commodity supply and demand, especially corn," says Charlie O’Brien, Association of Equipment Manufacturers senior vice president.
The Barometer covers Brazil, western Europe, Japan, India, South Korea, Turkey and the U.S.
We’re unlocking the mystery and getting inside the heads of Top Producer of the Year winners, with the hopes that you’ll pick up some tips to incorporate into your own farm. We asked Chad Olsen, the 2006 winner, what he knows now that he wishes he knew 30 years ago.
If I got to start fresh again, I would put more emphasis on accurate bookkeeping. It’s a key element in our operation today. Back then, I just wanted to be in a tractor and figured things would just work out. I learned the hard way that it’s an absolute must when trying to develop a partnership-type of relationship with your banker. Sometimes I had to sell grain because I needed a buck, even though I knew there would be a better time to sell in the future. I didn’t have a good enough relationship with my banker at the time because of my lack of record keeping. If I could go back in time, I would have been more profitable in my early years if I had dedicated myself to more time at the desk."
Two Pennies, Please
That’s what it costs taxpayers per meal for crop insurance, according to data from the latest 10-year budget projection by the Congressional Budget Office (CBO).
- September 2013