There are certain tax benefits put in place to help farmers.
Because farming is such a significant part of our society, there are many tax benefits afforded to farmers to aid in the success of their business. This not only includes common business expense deductions but also more intricate tax benefits.
Farm Income Averaging
You may have the option of allocating some of your current year's farm income to 1 of the previous 3 years for tax purposes. This is especially helpful if a prior year had low income and the current year's income was high.
Credit on Federal Excise Tax on Fuel
If you use fuel for farming purposes, you may be able to get a credit or refund on the federal excise tax depending on the type of fuel used. Generally, this only applies to off-highway business use.
Ordinary Business Expenses
Ordinary business expenses you incur to run your farm are generally tax deductible. This includes any business use of your house, truck and car expenses used for your farm and any other expenses you may sustain.
Tags: current year, year income, your farm