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The Farm CPA

RSS By: Paul Neiffer, Top Producer

Paul is now part of the fourth generation in America that is involved in farming and hopes the next generation will be involved also. Through his blog he provides analysis and insight to farmer tax questions.

IRS Releases 2012 Income Data

Aug 28, 2014

The IRS recently posted to their website the income statistics for 2012. These statistics break down income into their major components such as wages, interest, business income, etc. Farmers who file Schedule F are also listed. Farmers who file as a partnership or S corporation along with related wages would be lumped in with those other categories.

As usual, Schedule F farmers again showed a net loss for the year. There were 1,835 million Schedule F returns filed showing a net loss of about $5.5 billion. This may seem like a fairly large loss, however, when you divide it among all of the schedule F returns filed, it results in about a $3 thousand loss per farmer. Based on our history of dealing with most farmers, that sounds about right. Farmers like to get their farm income to about break even by taking advantage of Section 179, deferring grain sales and using prepaid farm expenses.

In comparison, the average Schedule C business owner reported net income of about $13,600 for 2012.

547 thousand individuals also reported crop share farm rental income on form 4835 resulting in about $5.8 billion of net rental income. Farmers reporting net cash rental income would be lumped in with other rental income so we cannot break those amounts out.

Total income from all sources was $9.234 trillion with adjustments of about $134 billion and itemized deductions of $1.238 billion (plus standard deductions of about $800 billion) resulted in net taxable income of about $6.4 trillion.

This may be a key reason why the IRS does not spend a lot of time auditing farmer's tax returns. The number of returns filed represent less than 1% of all returns filed and when the IRS looks at the statistics, there is not much there for them to get excited about.

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