Tax Advice for Farmers
Floods in 2011 and this year’s tornadoes could complicate the tax returns filed by Kentucky farmers. For example, when farmers receive an insurance check for damaged crops, IRS spokesman Luis Garcia says they must claim that money as income. And, if bad weather forces the early sale of livestock, Garcia says that income can sometimes be claimed on next year’s tax return.
“If you’re a farmer and you sold livestock..that you normally wouldn’t and you sold because of weather related conditions…you’re able to postpone until next year reporting..on the gain of only those additional animals,” said Garcia.
Many farmers took on loans after floods last year damaged their crops. Garcia says interest on those loans might be deductible, if they went into farm operations.
“Farmers will take out a loan and attempt to deduct the interest on it not knowing that, if they’ve used that loan for personal expenses…it doesn’t count..you can deduct the amount of interest you pay on a loan when it’s used for your farm but not your own personal expenses.” added Garcia.
Farmers may also be eligible to claim a credit or refund for federal excise taxes paid on fuel used on the farm.
Learn more at ruraltax.org