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Monday, March 30, 2009

Top Five Tips in Preparing Your Farm Taxes

April 15th is closer than you think, so I thought it was only necessary to get you prepared for filing your farm tax returns. As we all know preparing your taxes can be a real headache. In fact, even thinking about doing your taxes can give you enough incentive not to do them. There are many things you can do to ease headache throughout the year to make your taxes more controllable. These are the top five tips that I suggest agriculture producers to take in consideration when preparing your taxes.


Choose your Tax Preparer Intelligently

No one knows your farm finances better than you do so be sure to choose someone you trust knows what to do. Choose a licensed preparer that has not only the tax preparation knowledge but maybe agriculture tax expertise. Each year, new tax laws are put into place; your tax preparer should be aware of all of these updates and make you aware of them also. Use a tax preparer that is recommended by the Farm Bureau, your banker, or your farm neighbors. Chances are that a tax preparer that knows agriculture will be able to do complete your tax preparation quick and efficiently without oodles of questions.


Eliminate Costs by Organizing

Handing your box of receipts to your tax preparer is great if you have an excellent stash of money in your bank account and 5 months to file your taxes. Most tax preparers will charge more fees if they have to organize your receipts because it is time consuming. You are not their only customer. Before you meet with your tax preparer, organize all of your receipts, payments, and expenses.


Fill Out Tax Organizer

It is recommended that farmers fill out a good portion of the tax organizer. If you are running out of time at least have all the information ready to be filled in the tax organizer. You should fill out the personal information, income and expenses, estimated payments, and refunds. Filling out the tax organizer as much as possible eliminates time and tax preparer fees.


Good Records in Good Financial Order

Farmers need to provide the tax preparer with good solid records to receive the most deductions. To provide these solid records, farmers need to have their own accounting system in place on their farm. This will allow the farmer to easily at any time pick up the information and hand it to the tax preparer. Now, most of us do not have all the time in the world and certainly do not want to spend free time always having to keep their finances in good order. Do whatever works for your farm. You can use computer programs, farm books, or simply keeping an accurate log in a financial journal. This will make it easy for when you are ready to go to your tax preparer since you will need to total everything before handing it over.


Be Early

The best tax planning is done in November of December. It is smart to know what you have to work with on your farm in November or December. Most accountants will want you to talk to them around November.