Year End Tax Planning Tip for High Income Farmers
Farmers: Build Flexibility Into Income and Expense Planning
Manage Income Volatility Proactively
Agricultural income is inherently uneven. Using deferral strategies, crop insurance proceeds timing, and income averaging can help reduce the tax impact of strong production years.
Optimize Equipment and Infrastructure Purchases
Instead of defaulting to full expensing, consider whether spreading depreciation aligns better with projected income. This can preserve deductions for higher-income years.
Leverage Agricultural-Specific Credits
Credits related to fuel, energy efficiency, and conservation programs can significantly reduce tax liability. Proper documentation is essential to ensure credits are not lost in filing.