Mar 22, 2016
Technology has grown by leaps and bounds within the last several years. It is important, no matter what your profession, to make use of improved technology to better your business. Smart phone applications can be extremely beneficial for agricultural-based careers such as farming. Since farmers are constantly on the move during their busy seasons of planting and harvesting, smart phone apps provide mobility and allow farmers to remain up-to-date on items that may influence their crops.Here are just a few apps which may be of interest to agribusiness .
AgWeb – This free app is run by the Farm Journal and helps Farmers stay up-to-date on a variety of items such as market quotes, weather patterns, and recent agricultural articles. Users also have the option to listen to several top industry radio shows including AgriTalk.
FarmLogs – Another free app available for apple and android devices which allows users to maintain various logs from events which occur in the field, task lists, rainfall tracking, to managing inventory. Multiple users can log information, allowing everyone to see updates in real-time.
TractorHouse – This free app is similar to Autotrader for farm equipment. Farmers can sell farm equipment, parts, and equipment attachments. Some nice features are the ability to narrow a search by location and adding items to your “watchlist” for easy maneuvering.
Weed ID – There are several free apps for weed identification including those powered by BASF, Monsanto, or the University of Missouri. No matter which one you choose, these are excellent apps to aide in the quick identification of weeds and how to best treat an infected field.
CheckIt – This app allows farmers to narrow down what deficiencies are apparent in a given crop and provides recommendations for improvement. One great feature to this app is its ability to function without a strong tower signal. Hence, farmers will never be “stuck in the mud” with this app not working.
Do you use any of these applications? Are there others you believe to be extremely beneficial?
By: Ellie Herr, Staff Accountant
Sep 23, 2015
It’s that time of the year again when farmers put in long hours harvesting their products from the field. Filling the fuel tanks of all the machinery can become pricey, but fuel tax credits can help reduce the financial burden.
Even though many farmers purchase dyed diesel without having to pay federal taxes, they may still be eligible for the fuel tax credit for other fuels utilized for business. The fuel tax credit is done on Form 4136 and is a refundable credit to the taxpayer. This means even if the credit is more than the amount of tax you owe, you will receive a refund for the balance. Here are a few common examples of how the credit could be used for you:
- Off road use of gasoline-powered pickups or trucks
- Off road use of gasoline-powered tractors/combines
- Off road use of gasoline powered automobiles
- Compressors operated on the farm powered by gasoline
- Backup generators powered by gasoline (or diesel if undyed)
- Lawn mowing/landscaping equipment used in farm areas
- Maintenance shed equipment (any gas operated items used to repair machinery)
- Gas used in ATV’s
- Use of propane powered equipment
Note: If you have propane powered equipment, such as a forklift, you must register the equipment with the IRS in order to claim the fuel used for this purpose.
There may be other ways of receiving this credit which are not listed above. If you think you may be eligible, talk to your tax advisor. Proper supporting documentation will be required. If you are eligible, you are required to pick-up the credit as income for the farm in the following year. Even with this being the case, the fuel tax credit could save you thousands of dollars in taxes per year.
By: Ellie Herr, Staff Accountant
Jul 02, 2015
In small family farm operations it is common for spouses to provide a variety services such as bookkeeping, payroll, providing meals for workers, feeding livestock, moving workers from field to field, and even taking grain to the elevator. If your spouse does any of these and more for the family farm, it may be tax advantageous for your to pay them a fair wage. These wages can either be paid as cash wages or commodities.
Cash wages are subject to Social Security and Medicare taxes in addition to any federal and state withholdings. Commodities are not subject to Social Security or Medicare taxes and are also not subject to the federal income tax withholding rules.
If you feel commodity wages are the route you wish to take, you must make sure the following:
- payment is for agricultural labor
- the employee exercises control of the commodity,
- the payment is not equivalent to cash
- the employer puts the fair market value of the commodity (at the time of transfer) in box 1 of the W-2. If there is any gain or loss when it comes time for the employee to sell the commodity, they will record the gain or loss as a short-term gain or loss on Schedule D of their tax return.
If you feel that cash wages are the way to go, know they can be used to calculate the Domestic Production Activities Deduction.
Farmers who are subject to self-employment tax have the ability to deduct their health insurance before Adjusted Gross Income is calculated. While this is a great deduction, it does not help the farmer save on any of their self-employment tax liability. If the farmer employs his or her spouse, they have the ability to pay family coverage in the spouses name and deduct it through the business. Be careful as this will be disallowed if the spouse works for another employer that provides subsidized health insurance.
Talk to your farm tax advisor to see which option is most tax advantageous for you.
By Ella Herr, Staff Accountant
May 13, 2014
In a world that allows technology to be at your fingertips, it is no wonder the farming community is utilizing this technology by offering applications for smartphones to keep track of all aspects of farming operations from grain to livestock and everything in between. My father, who has been farming all of his life, recently bought his own smartphone and was hoping to get applications for this very purpose. So, I helped him find some of these apps and thought I’d share them with you. Here is a list of some of the popular applications that you are able to use for your own farm managing benefit.
FarmLogs – This free app is available for apple and android devices and it allows users to easily keep a log of events that happen in the field, the shop, or anywhere else they want to keep track of. One of the benefits to this app is that multiple users can log information in, allowing everyone to see updates in real time. This app is fairly new, but the ratings have been high up to this point.
Farm Manager – This free app is available for both apple and android devices. Farm Manager allows users to keep a full history of crops from when they are planted to when they are harvested. It also can keep records of chemicals and fertilizers applied, full details of livestock, full details of machinery, including service dates, and then you can also store pictures of machinery and crops that link to your data. It appears to record all the information on pages that are similar to apple’s note pages, making it pretty simple to use. One downside to this app is that you will have to pay a fee if you wish to sync the data with their cloud services, but otherwise everything is free.
YieldCheck – This free app is available for apple devices and it allows farmers to calculate and store corn yield estimates and can organize this data by client, farm, or even post detailes of a specific field. It can differentiate the field locations by using satellite imagery. The overall goal this app hopes to achieve is allowing users to see how much they can benefit from an additional ear of corn per acre. While I have not personally used this app, there have been several positive reviews.
Cash Grain Bids – This free app is available for apple and android devices and it allows users to simply put in their zip code and find cash bids and base levels of grain from the five closest elevators in your area. This application has some setbacks because you are not able to directly choose the elevators you wish to view, but a majority of the users say that it is simple but effective. On the downside this app is still new and has some more bugs to work out.
CheckIt – This free app is available for apple and android devices and it allows users to take a picture of a crop and it identifies nutrient deficiencies in that plant. Farmers can use this information to apply the needed nutrients to the crops so they can maximize their yield when it comes time to harvest.
Livestock Manager – This app costs $14.99 and is only available on apple products. It allows users to categorize their livestock by five different classes: cattle, horses, goats, sheep, and pigs. Once categorized, you are able to add a picture of each animal along with any other information that you would like to store from date of birth, to calving and breeding history, to vaccination history. One added bonus is the ability to link your animals with social media to market your animals effortlessly.
As an accountant I appreciate how these apps can help keep everything organized and hopefully can make you even more profitable!
Do you have an opinion on any of these applications or have any recommendations of apps you are currently using?
By: Ellie Simon, Staff Accountant
Dec 20, 2013
Crops are harvested, wheat is planted, and most equipment is stored away in the barn after another farming season comes to a close. 2013 is coming to an end, but farmers still have some opportunities left to reduce their 2013 taxable income. Here are a few techniques that could keep dollars in your pocket.
Prepaying Expenses One way of reducing taxable income is prepaying some of your 2014 expenses. Because most farmers are cash basis, when they prepay for items, such as fertilizer, lime, chemicals, etc. they are able to deduct this expense in the year they made the payment. This helps reduce Schedule F income, which in effect lowers both AGI and self-employment tax.
Depreciation Did you buy a new tractor or some other large asset to capitalize? Well then, you are able to take 179 and/or bonus depreciation. 2013 still allows taxpayers to take up to $500,000 in section 179 depreciation for current year assets, and 50% bonus depreciation on new assets. As of now, the $500,000 limit section 179 depreciation will be reduced back down to $25,000, and bonus depreciation will expire all together. Being able to take a full deduction for new equipment can be a huge tax savings. However, if you take a full deduction in the current year you will not have any deduction remaining for future years, so it is important to determine the best short-term and long-term plan
Itemized Deductions Another approach taxpayers can take is increasing their itemized deductions. Making additional charitable contributions, paying large state and local estimates, and prepaying tax preparation fees are all ways to increase one’s itemized deductions. Keep in mind if you are in an alternative minimum tax (AMT) situation then you will not receive any benefit for the prepayment of state and local taxes. Also some of these deductions are limited.
Income Averaging Income averaging rules offer a very powerful tool for farmers and fisherman to take advantage lower tax brackets for both ordinary income and capital gains. This is especially important in 2013 with the new 39.6% bracket for ordinary income and 20% bracket for capital gains. The income averaging schedule allows farmers and fisherman to send back a portion of their current year income to the three previous tax years.
Farmers may also benefit from income averaging by amending prior year tax returns. If they amend, they have the opportunity to push back more of their income, and therefore, reduce their overall taxable liability.
As useful as this tool is, I should mention that it will not reduce self employment tax, the net investment income tax, nor the phase outs of personal exemptions and itemized deductions that come from higher Adjusted Gross Income (AGI).
When looking at these planning techniques, remember that you may have special restrictions with some of these savings so it is always a good idea to make an appointment with your tax advisor to determine what the best approach is for you.
By: Ellie Simon, Accountant