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Some Last-minute Tax Tips
The end of the year often brings last-minute efforts to juggle costs and sales in order to reduce income taxes that you’ll file next March.
Charles Brown, and Iowa State University Extension Farm Management Specialist cautions that some things won’t work.
He’s hearing of farmers making large deposits at co-ops to prepay expenses. You can’t just walk in and write your supplier a check for $100,000, he tells Agriculture.com
“Just laying down a big deposit does not qualify with the IRS for a tax deduction,” Brown says. “You’ve got to have a receipt for a specific item.”
The recent changes to Section 179 expensing approved by the lame duck session of Congress that ended last week could help a few farmers as well.
The law literally gives you a few days to buy enough farm machinery and other equipment to qualify for the new, higher $500,000 limit that ends before 2015.
“I’ve had some farmers call me the last several weeks wanting to use Section 179,” Brown says.
Machinery usually comes to mind. Another possibility: “Grain bins are an option” because they’re considered seven-year property.
But, unlike picking up a new tractor or combine, that’s not going to be a good year-end option if it’s not built.
Section 179 can apply to either new or used equipment, but with a new asset, it’s supposed to be available and ready to use by the end of this year, Brown says.