Many farmers file an income tax return by March 1. It allows them to file and pay all tax by this due date without having to make an estimated tax payment on January 15.
This provision is becoming more and more outdated each year. Many farmers are investors in companies who, at best, file their tax returns by March 1. Also, the Form 1099s from brokerage companies get later every year.
We have made a strong effort to get our farmers to make one estimated tax payment on January 15. This required payment is the lower of 100% of the prior year’s tax or 2/3rds of this year’s tax.
With very low interest rates, in most cases, you are better off economically doing it this way.
However, this year, there is an additional wrinkle. The stimulus bill that will become law likely this week or early next week has a new provision. Many farmers have spouses that work outside the home and many of those spouses received unemployment benefits last year. Normally, these benefits are 100% taxable, but the new bill (assuming it passes) has a provision to exempt up to $10,200 of these benefits. This exemption starts to phase out as your income goes over $150,000.
This means that if you filed your return by March 1, you will need to file either an amended tax return; or you may use the superseding tax return provision. An amended return can be e-filed, whereas a superseded return has to be filed manually and certain steps are required.
In either case your refund from filing this return will likely take 6 months of more. The IRS still has about 200,000 returns from 2019 that they have not processed.
If you had waited to file your return on April 15 none of this would have applied.
