Bebo Trucking Lester Prairie ( 612 ) 735-4808
Farm Horizons • Dec . 5 , 2016 • Page 19
Another year completed
We have reached the end of another crop year , and 2016 was not without its trials , with wet , cold weather after some of the early plantings , some drowned out spots , and a lot of wet spots come harvest time . Is your year really completed ? Now that you have the machinery cleaned up and put away ( you did clean all of the mud off , didn ’ t you ?), the bins checked and the centers pulled out , and now being cooled down for the winter , you are done , right ?
Not so fast . Now , you have some record-keeping to do , some accounting to do , and a tax estimate to be done . So , we have some office time as the days get shorter and colder , and the ice is not thick enough to go fishing .
Let ’ s tackle the record-keeping first . Yields should be tracked for each field . If you have yield maps from the combine , you need to study them for patterns . What is consistent with the low yields and the high yields ? Can anything be done to improve the areas with low yields – drainage , fertility , organic matter , tilth ? These would all be possibilities , along with variety , misapplication , field history , and a dozen more .
I had a college professor say that a productive field is always fertile , but a fertile field is not always productive . See the list above for possible reasons why .
You also need accurate production records for Farm Service Agency , crop insurance , and to do an enterprise analysis . Did you make any money on that crop ; on that farm ? What chemical was applied ? Does it have any carryover restrictions ? What mode of action was it ? Was the chemical program effective ? Was it a restricted-use product ? Are your spraying records complete ?
OK , we have the production records done , now we can move to the accounting . If you haven ’ t started your financial records yet , you have a lot of work to enter into the software before the year-end . Better get a glass of water or coffee and sit down at your desk / table and get to work .
It is essential to get a tax estimate done before the yearend . That doesn ’ t mean getting your appointment for Dec . 30 . You need time to get the estimate done , and that may mean explaining the results to your family and the banker . There is no reason for taxes to be a surprise come January and February . We have at our disposal a very good tax estimate
Bebo Trucking
Lester Prairie
We will haul your : - Decorative Rock - Grain - Granite - Gravel
Bebo Trucking Lester Prairie ( 612 ) 735-4808
worksheet that allows you to see the income and expenses for the year , along with depreciation , personal income and withholdings , and some tax credits .
Doing an estimate allows you to see ahead of tax time what your tax liability would be , and then you can explore how you can manage that liability . Do you defer income , bring income in , or use prepayments to increase expenses on the Schedule F ?
We have a lot of options to manage this expense prior to the end of the year . After Jan . 1 , 2017 , the only option to manage taxes is to put money into an IRA or SEP account .
Keep in mind that your self-employment tax for Social Security is a part of that tax liability . There are a lot of retired farmers that boasted about never paying taxes , and now are living on the minimum payment for Social Security .
If you have higher earnings than you expected , use the Section 179 deduction if you have made any capitol purchases . However , if you have a loan for that piece of equipment , then you need to use the regular depreciation and not the Section 179 deduction .
Depreciation is the allowance for the principal payments that would be due on that loan , so if you expense the entire machine you now have no allowance for the payments and could get yourself into a cash bind during the life of that loan .
Also , remember that Minnesota limits your Section 179 deduction to $ 25,000 per year . If you have more than that for a year , then the amount over $ 25,000 must be carried over and 20 percent used each year for the next five years on the state return .
If you have a Domestic Production Activities Deduction ( DPAD ) credit from a cooperative that has elected to pass the credit through , be sure to have that paperwork with , so that the credit can be used . This , and other credits are available and should be used .
So , between now and the end of the year , you need to spend time at your desk and do some financial management and record-keeping . You cannot manage something if you don ’ t first measure it and record it .
If you need help with your record system , contact a Farm Management Instructor . We are here to help . •
Myron Oftedahl Farm Business Management Instructor , South Central College
LIVESTOCK TRAILERS
LIVESTOCK TRAILERS
Deluxe II Trailers
All Aluminum “ Top of Our Line ” The “ beefiest ” all alum stock trailer in the industry features a square tube rear frame . 4 ” x 4 ” exclusive and extruded aluminum planking floors and sides .
Many other Kiefer Built stock trailer models available
THURK BROS 3932 Main St ., St . Bonifacius , MN 55375 • ( 952 ) 446-1082 • 800-645-9685 Franchised Kiefer Built Dealer for over 30 Years