The deadline for farm taxes is fast approaching with just a few weeks until they are due. While each farmer's situation is unique, there are several items nearly everyone should check off their list prior to arriving at a tax appointment. Rob Holcomb, University of Minnesota Regional Extension Educator has the following comments.
First of all, make sure to have a copy of the most up-to-date copy of your accounting report for tax year 2009. Communicate with your tax professional as to what reports that they will need. As you assemble your year-end accounting report, be aware that such expenses as utilities, fuel, property taxes and business vehicle use must be examined to determine the business portion of those expenses. If you don't reflect the business use in the accounting report, make sure to have notations prepared to share with your tax professional.
Generally, income received within the business year is taxable. If you sold commodities using deferred payment contracts, make sure to bring those contracts to your tax appointment. Also make sure to include any paperwork from the Farm Service Agency (FSA) office that works with your farm and addressees government program payments. If you received any crop insurance payments in 2009, bring along any supplemental paperwork showing the total insurance benefit plus any insurance premium that may have been withheld.
Also remember to bring all tax documents to your appointments that are used to report income to the Internal Revenue Service. Federal reporting documents include W-2s and 1099S. Any money reported on these forms must be included on your tax return. Some 1099s may not have arrived by the end of the year. 1099s reporting patronage from a cooperative may have been mailed out earlier in the year. You will have to contact the cooperative for a duplicate copy if you misplaced the form.
While most farmers are cash-basis tax filers, accrual basis filers must also bring a complete listing of farm inventory to the tax appointment. Additionally, farmers should include records of medical, dental, property tax, education, and health insurance expenses. Most tax professionals will supply you with a checklist of items to bring along to your appointment. Be sure to bring a copy of last year's tax return and accounting records. Adequate preparation for your tax appointment helps to decrease your stress and also helps your tax professional to accurately prepare your income tax return.
If you own a grain or livestock truck (does not apply to pickups), you may be required to file a Federal Form 2290 (Heavy Use Tax). An owner-operator of a commercial truck must file a form 2290 each year and must have a receipt returned from IRS in order to demonstrate that the federal tax was paid. The truck owner is required to present this receipt at the time the truck license is renewed. Most county license bureaus in recent years have not required a farmer to have a receipt from the IRS in order to renew their truck registration. This is due to the fact that farm trucks (that are not hauling commercially and are operated less than 7500 miles per year) are exempt from Federal Heavy Use Tax. This has now changed and county license bureaus now request a completed 2290 at the time of license renewal. If you are asked for a completed form, contact your income tax professional for assistance. In order to complete the form, you will need your Tax Identification or Employer Identification Number (TIN or EIN). If you previously issued W-2s to employees, then you already have a number. You will also need the Vehicle Identification Number (VIN) for the truck in question. \A good practice is to photocopy the truck registration card for your tax professional to insure that the correct VIN is reported on the form.