With only 29 days until tax day, as we prepare to sit down with our experienced Tax Professional, I am scurrying to get all my chickens in a row and all my papers in order. I want to make sure every i is crossed and every t is dotted and that our experience is a quick and painless as possible but even the most knowledgeable tax professional can’t complete your taxes properly without all the correct documentation.
Unfortunately, all the lists I found online were very general and didn’t include any of the specifically Farm or specifically Homestead items that we encounter so I decided to put together a Tax Prep Checklist for Farmers and Homesteaders.
Here is a checklist I’ve compiled to help give me some peace of mind as I head off to the see the Tax Man.
Who are you?
Unless you have done your taxes with the same person for years, you’re going to need ID. Just like Bank Clerks, Tax Preparers, are supposed to verify your identity to get you your money … or bill … depending on your situation.
- Photo ID driver’s license or military or student ID
- If they don’t ask for it and they aren’t family friends, I’d be weary. Just saying!
- Social Security Card (for each member of your household) or at least the numbers
- You don’t want to find out you’re not getting your refund because one of your kids social is off by one digit.
- Your Checkbook, a Voided Check or the Account Information
- Again, typos suck!
- Any documents for name changes
- Did you get married, divorced, add the “Artist formerly known as” to your name? You need to show the documents!
Show Me The Money!
Bring documentation for all your earned and unearned income, including:
- This is what you get from your “Off-The-Farm” job. I get one of these because our farm is still not 100% sustainable on it’s own, but someday!
- Also from your “Off-The-Farm” job. You get these if you are an independent contractor.
- You get these from any official type institution that paid you more than $10 in interest.
- Expect one these if you took any money out of a retirement account, like a 401(k) or an IRA.
- You usually get these if you took unemployment it could also be other types of government payments.
- You get one of these if you got any dividend payments from stocks or other investments.
- These are issued by your stock broker for any stocks you sold during the year.
- You will receive one of these if you won more than $500 gambling.
- These are for Co-op distributions. You need to have one for each person to whom the cooperative has paid at least $10 in patronage dividends.
- Detailed Log of Sales of Livestock and other products bought for resale
- Detailed Log of Sale of livestock and other products you raised
- Documentation about any Money received from Federal agencies
- Detailed Log of Cost or basis of livestock and other products sold above
- A list of all ordinary and necessary expenses related to your farming business by category
- A list of Assets and equipment purchased during the tax year for your farming business with the following information:
- Date of purchase
- Date put into service for your farm
- Full description of item purchased
- Business use percentage
- Sales price of item
- Did you sell/trade in/take out of service and equipment during the tax year? We need to know the details.
- For farming vehicles, we will need the following information:
- Description of new vehicles
- Total miles for the year (Actual, not an estimate)
- Total farm miles for the year (Actual, not an estimate)
- YOU NEED TO KEEP EVIDENCE TO SUPPORT YOUR MILEAGE IN CASE OF AUDIT (LOG BOOK, CALENDAR)
You are also required to give proof of any self-employment income, even if you did not make a profit (your tax preparer will discuss deductible expenses with you). Be honest and include income from activities like hobbies since it is less costly to deal with the taxes now than to face an audit later.
Bartering Counts too!
Keep track and get/make receipts for any barter and trade exchanges you make. They count as an exchange of value too.
Spend it Wisely!
We use mostly our debt cards to pay all expenses for the benefit and ease of downloading our activity at the end of the year which allows us to sort and filter through using Excel rather quickly.
- Self-employment or home office expenses
- Tally your business mileage and gas/toll/repair expenses separately and let your accountant determine which is to your advantage to use. If you have a home office for use with your job, total all your expenses, including utility bills, as your accountant will be able to take a percentage of them as a business expense.
- Education expenses
- Include both required education expenses for your job, such as continuing professional education and training, and college tuition bills for yourself, your spouse, or dependent children. You should receive a 1099-T from any college or university to which you paid tuition.
- Medical expenses
- This total should include all of your out-of-pocket expenses for deductibles, co-pays, medications, and insurance premiums that you paid. You will only be able to deduct these expenses if they exceed 10% of your adjusted gross income.
- Charitable contributions
- Tally all receipts for monetary donations. Donations of goods such as clothing and furniture should include a description of the items along with their fair market value.
- Mortgage interest
- If you own a home that has a mortgage, your lender sends you a mortgage interest statement that will include the total amount of interest you paid for the year.
- IRA contributions
- Unlike 401(k) contributions, which are made with pre-tax dollars through your employer, IRA contributions are made with after-tax dollars, which means they can be deducted from your income on your tax return.
- Energy-efficient home improvements
- Some, but not all, improvements to your home that improve its energy efficiency may be tax deductible.
- State, local and sales taxes
- Most taxes that you paid during the year are deductible from your income. These include state and local income taxes, property and school taxes, as well as sales tax that you paid on big-ticket items like appliances and cars.
- Unreimbursed employee expenses
- These includes things like required work uniforms that you pay for as well as tools that you need to perform your job. You can’t deduct clothing that can be worn outside of work.
- Losses to casualty or theft
- These include things like stolen property that was not covered by insurance or injuries or damages that were not covered by insurance.
- Gambling losses
- Losses are only deductible against winnings.
- Tax preparation fees
- The amount you paid to have last year’s taxes completed is deductible on this year’s tax return.
Any thing to add?
Did we miss any? Let us know!
Drop us a line in the comments!
Books and Resources:
- Farms with a Future: Creating and Growing a Sustainable Farm Business
- Better Farm Accounting: A Practical Guide for Preparing Farm Income Tax Returns, Financial Statements, and Analysis Reports
- Fearless Farm Finances: Farm Financial Management Demystified
I am not a tax professional, I don’t even play one on TV. I just complied this list of items I want to have with me when I go see my personal tax prepare in case they need it. If you have any tax questions or concerns, please consult a tax professional or call the IRS Hotline.
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