Tax Management
David Marrison, OSU Extension Educator
OSU Extension and The Ohio State University’s Department of Agricultural, Environmental, and Development Economics Department are pleased to be offering the 48th Annual OSU Income Tax Schools at eight locations across Ohio in November and December. These two-day schools are designed for individuals who have some experience preparing and filing federal and state tax returns for individuals and small businesses. Instruction will focus on federal tax law changes and on the issues that tax preparers may encounter in 2011 preparing tax returns. The schools also will include an Ohio income tax update. Highly qualified instructors will explain and interpret tax regulations and recent changes in tax laws.
The registration fee includes the workbook and other reference materials, instructor fees, meals, meeting rooms, and other expenses. Participants in the Tax Schools will receive the 2012 RIA Federal Tax Handbook and the 700 page National Income Tax Workbook (including a searchable CD containing the 2004-2011 workbook) prepared by the Land Grant University Tax Education Foundation especially for the income tax schools held in Ohio and 30 other states. The National Income Tax Workbook is available only as a part of the tax school registration. Continuing education credit for Accountants, Enrolled Agents, Attorneys, and Certified Financial Planners will be offered.
The tax school locations are as follows:
Dayton – November 8-9
...
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Source-Internal Revenue Service
Fall weather has arrived in Ohio meaning that thousands of young adults have returned to colleges across the state. As college costs continue to increase, the Internal Revenue Service is offering tips for students and parents as they pay tuition and other school related fees. The Internal Revenue Service reminds students or parents paying such expenses to keep receipts and to be aware of some tax benefits that can help offset college costs.
Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.
1. American Opportunity Credit This credit, originally created under the American Recovery and Reinvestment Act, has been extended for an additional two years – 2011 and 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment. The full credit is generally available to eligible taxpayers whose modified adjusted gross income is below $80,000 ($160,000 for married couples filing a joint return).
2. Lifetime Learning Credit In 2011, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institut...
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WASHINGTON — The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011. Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.
The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011, through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.
In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.
"This year's increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices," said IRS Commissioner Doug Shulman. "We are taking this step so the reimbursement rate will be fair to taxpayers."
While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.
The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many bu...
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by: David Marrison, OSU Extension Educator
Last May, the Ohio Ag Manager shared an article titled, The Impact of Section 9006 of the Patient Protection and Affordable Care Act on Agriculture (May, 2010) discussing the new 1099 reporting requirements in the Health Care Bill. At the time of the article, we promised to update subscribers of the Ohio Ag Manager, if a repeal happened. Thankfully for many agricultural businesses, President Obama signed into law the Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011 (H.R. 4) on April 14, 2011. This resolution repeals the expanded 1099 reporting provisions of the Patient Protection and Affordable Care Act (passed in March 2010) and Small Business Jobs Act (passed in September 2010).
In March 2010, the Patient Protection and Affordable Care Act sought to expand the 1099 reporting requirements (beginning in 2012) to include all payments from businesses aggregating $600 or more in a calendar year to a single payee, including corporations (other than a payee that is a tax-exempt corporation) and to include payments made for property (was only for services not goods, previously). H.R. 4 signed by the President repeals this 1099 reporting expansion. Under the proposed rules, a 1099 would have to be issued by a farm business to any business or individual who the farm purchases tangible goods. For example, Farmer Jones purchases 25 tons of lime valued at $760 worth from XYZ Lime and Far...
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by David Marrison, OSU Extension Educator
Do you need a resource to answer those tough farm tax questions? If so, farmers can receive a free copy of IRS Publication 22, the 2010 Farmers Tax Guide, at their local county OSU Extension office. The 2010 Farmer’s Tax Guide is an 89 page publication which explains how the federal tax laws apply to farming. This guide can be used as a guide for farmers to figure taxes and complete their farm tax return.
Some of the new topics for the 2010 tax year which are included in this publication are: standard mileage rate, increase in deduction for start-up costs, limitation on excess farm losses, increased section 179 expense deduction dollar limits, extension of special depreciation allowance, property eliminated from definition of listed property, decrease in personal casualty and theft loss limit, disaster losses, self-employed health insurance deduction, and wage limits for social security tax. More information can be found at the IRS website at:
http://www.irs.gov/publications/p225/index.html
The Rural Tax Education Site has an example Schedule F on their web site to help producers as they complete their Schedule F. The sample return can be found on web site at: http://ruraltax.org/
Click here to find the location of the OSU Extension County Extension offices
Click here to access a printable PDF version of the 2010 Farmer’s Tax Guide
by David L. Marrison, OSU Extension Educator
On December 3rd, the Internal Revenue Service issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
51 cents per mile for business miles driven (up from 50 cents per mile in 2010)
19 cents per mile driven for medical or moving purposes (up from 16.5 cents per mile in 2010)
14 cents per mile driven in service of charitable organizations (same as 2010)
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
This blog article was written by using a press release provided by the Internal Re...
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by David Marrison, OSU Extension Educator
Tax practitioners with an interest in farm income taxes will have an opportunity to attend a one day farm tax workshop scheduled for Monday, December 13, 2010 from 8:30 a.m. to 3:00 p.m. in eight locations across Ohio. This workshop will be taught by Dr. Phil Harris, Professor of Agricultural Economics, University of Wisconsin via tele-conference.
This program has been designed for tax practitioners who have a significant number of farm clients and therefore need a substantial amount of information on agricultural tax issues. Participants will hear an audiotape of a live lecture given by Phil Harris, supplemented with a showing of the slide presentation Dr. Harris used during his lecture. Dr. Harris will be available for questions during two conference calls during the day, and OSU faculty will be in the meeting rooms to answer questions. Registrants will receive a valuable 236 page supplemental book.
Some of the topics at these workshops include: new legislation and its affect on agricultural businesses, depreciation and Section 179 expensing, wind turbines and wind farms, deduction issues, weather related sales, payment of agricultural wages with commodities, energy incentives, contract and custom farming, gifts of commodities, sale versus lease of equipment by retiring farms, and farm income averaging.
The locations for the 2010 Agricultural Issues Workshops are:
Caldwell, Ohio OSU Extension South Central Region Office
Columbus, Ohio OSU Campus- Room 105Agr...
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by Barry Ward, Leader, Production Business Management
Ohio State University Extension
Department of Agricultural, Environmental and Development Economics
Very few sections of the Internal Revenue Code are written specifically for timber. This means there is a considerable amount of interpretation involved. This website was developed to be used by timberland owners, as well as a reference source for accountants, attorneys, consulting foresters and other professionals who work with timberland owners by answering specific questions regarding the tax treatment of timber related activities.
http://www.timbertax.org/
by Barry Ward, Leader, Production Business Management
Ohio State University Extension
Department of Agricultural, Environmental and Development Economics
This new website provides farmers and ranchers, other agricultural producers and Extension educators with a source for agriculturally related income and self-employment tax information that is both current and easy to understand. This website includes many short easy-to-understand factsheets addressing issues critical to farmers. Topics include: Like Kind Exchange of Business Assets, Sale of Business Property, Form 1099 Information Returns, Farm Losses versus Hoppy Losses, Filing Dates and Estimated Tax Payments, Weather Related Sales of Livestock, and more.
This website also includes a sample farm tax return. The link to this informative website is:
http://www.ruraltax.org/
by Barry Ward, Leader, Production Business Management (Source: Internal Revenue Service)
Department of Agricultural, Environmental, and Development Economics
The new health reform law gives a tax credit to certain small employers (including farm business owners with employees) that provide health care coverage to their employees, effective with tax years beginning in 2010.
Small employers that provide health care coverage to their employees and that meet certain requirements (“qualified employers”) generally are eligible for a federal income tax credit for health insurance premiums they pay for certain employees. In order to be a qualified employer, (1) the employer must have fewer than 25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average annual wages of its employees for the year must be less than $50,000 per FTE, and (3) the employer must pay the premiums under a “qualifying arrangement”.
The IRS has an informative website that answers the many different questions about this new provision of the Patient Protection and Affordable Care Act which was passed by Congress and was signed by President Obama on March 23, 2010.
The following webpage contains questions and answers that provide information on the credit as it applies for 2010-2013, including information on transition relief for 2010.
http://www.irs.gov/newsroom/article/0,,id=220839,00.html
by David Marrison, OSU Extension Educator
OSU Extension and The Ohio State University’s Department of Agricultural, Environmental, and Development Economics Department are pleased to be offering eight OSU Income Tax Schools across Ohio from November 9 through December 10. These two-day schools are designed for individuals who have some experience preparing and filing federal and state tax returns for individuals and small businesses. Instruction will focus on federal tax law changes and on the issues that tax preparers may encounter in 2010 preparing tax returns. The schools also will include an Ohio income tax update.
Participants in the Tax Schools will receive the 2011 RIA Federal Tax Handbook and the 2010 National Income Tax Workbook (including a searchable CD containing the 2004-2010 workbook) prepared by the Land Grant University Tax Education Foundation especially for the income tax schools held in Ohio and 30 other states. The National Income Tax Workbook is available only as a part of the tax school registration. Highly qualified instructors will explain and interpret tax regulations and recent changes in tax laws at these schools. Continuing education credit for Accountants, Enrolled Agents, Attorneys, and Certified Financial Planners will be offered.
The tax school locations are as follows:
Kent – November 9-10
Kent State University Student Center
Summit Street
Kent, OH 44242
Columbus – November 15-16
Bridgewater Banquet & Conference Center
10561 Sawmill Parkway
Powell, OH 4...
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by Barry Ward, Leader, Production Business Management
The recently passed “Small Business Jobs Act of 2010” signed into law on Monday, September 27th allows for opportunity for sizable tax write offs for farmers in 2010 and 2011. In an effort to further jumpstart the economy, this Act raises the threshold on “Section 179 Expensing” from the current limit of $250,000 to $500,000 for tax years 2010 and 2011. The terms apply to new and used equipment. Previous law phased out the deductions as eligible purchases exceeded $800,000. The new ceiling for this phase-out has been raised to $2,000,000. The new Act also revived the 50 percent bonus depreciation for qualified property placed in service in 2010. These measures are meant to be an incentive for taxpayers to buy equipment.
Further information on the Act can be found at:
http://www.calt.iastate.edu/taxbill.html
http://www.sba.gov/jobsact/
by David Marrison, OSU Extension Educator
This past month an email question was posed to the Ohio Ag Manager Team about the Ohio Sales & Use Tax Exemption for agricultural producers.
The farmer's question was when he purchased a truck for use as a farm truck, why was he charged Ohio sales tax? This is a great question as there is often confusion on what agricultural purchases are or are not exempt from Ohio Sales Tax. The quick answer to the producer's question is while the truck will be used exclusively as a farm vehicle it is NOT exempt from Ohio Sales tax. The purpose of this article is to help clarify the Ohio Sales Tax Exemption for Ohio Farmers.
The sales and use tax is Ohio's second-largest source of revenue. The Ohio sales and use tax dates back to 1934, when the Ohio General Assembly enacted its first tax (at 3%). The state sales and use tax rate has been 5.5 percent since July 1, 2005. Current law gives counties the option of levying a sales tax of up to 1 percent for county general re...
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by David Marrison, OSU Extension Educator
January is the time of the year which farm managers begin their annual winter task of compiling their records to complete their schedule F tax form. Farmers can receive a free copy of IRS Publication 225, the Farmers Tax Guide, at their local county Extension office.
Click here to find the location of the OSU Extension County Extension offices
The farmers tax guide can also be obtained on-line at:
http://www.irs.gov/publications/p225/index.html
This year's tax major tax changes include a new recovery period for certain machinery and equipment. Certain machinery or equipment placed in service after 2008 and before 2010 will be treated as 5-year property. The maximum amount you can elect to deduct for most section 179 property placed in service in 2009 is $250,000. This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $800,000. Under current legislation, the Section 179 limit is scheduled to drop back to $125,000 with index...
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by Dianne Shoemaker, Extension Dairy Management, The Ohio State University Extension
Most dairy producers are glad see the end of 2009 and are looking forward to better conditions in 2010. Even though many farm families will have net operating losses, income tax management is still an important issue that must be high on the “to-do” list.
Why are income taxes a concern if a farm lost money this year?
It is possible for a farm that lost a considerable amount of money to have a positive cash farm income for tax purposes, and owe income taxes…and not have the dollars available to pay them.
How could a farm lose money all year and still owe income taxes?
This depends on how the family has been able to handle their cash shortfall. If the farm is current on their bills because they used savings, a line of credit or another loan to pay those expenses in 2009, then the expenses are deductible in the 2009 tax year. But, if the farm has open accounts, those dollars are not deductible expense...
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Keith L. Smith, Ph.D., Associate Vice President for Agricultural Administration and Director, Ohio State University Extension TDD No. 800-589-8292 ( Ohio only) or 614-292-1868
