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10 Tax Tips for Farmers

        Money | Taxes

7
Know Your Deductions!
As a farmer, it's important to know which expense deductions you can claim in order to save money. VBaleha/Thinkstock
As a farmer, it's important to know which expense deductions you can claim in order to save money. VBaleha/Thinkstock

Unlike most people -- who generally have to make the choice between itemizing all their deductions or taking the standard deduction -- those who run a farming business can take some deductions as business expenses without having to itemize. It might not sound like that big of a deal, but it can sure help you out. When itemizing, you have to have enough deductions to equal at least 2 percent of your adjusted gross income -- and at that point, you'd need enough of them to beat the standard deduction. Of course, you'd need records and receipts for all of them as well.

As a farmer, you can claim expenses as part of your normal and ordinary farming practice, and you don't have to meet a certain dollar value: The more you have, the better [source: IRS]. For that reason, it's really important you familiarize yourself with as many expense deductions as you can, lest you miss out on a sweet tax write-off. The IRS has a list of deductible farming expenses, and it's quite detailed and varied. For instance, if you prepaid for any supplies during the year and didn't end up using them, you can write them off. You can even write off the cost of fertilizer or lime -- and the costs of applying them [source: IRS].


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