Ep. 121 | Exploring Farm Tax Benefits and Strategies
Download MP3About the Guest: Kelly Bender
Kelly is a seasoned accountant with extensive expertise in agricultural taxation. She owns a thriving accounting practice based in Pennsylvania and is deeply embedded in the farming community both professionally and personally. Alongside her husband, Kelly manages a farm that raises various animals and crops, giving her first-hand experience with the unique financial intricacies faced by those in agriculture. Her diverse background combines a rich understanding of tax law with grassroots farming knowledge, making her a sought-after advisor for farm-related financial matters.
Kelly is a seasoned accountant with extensive expertise in agricultural taxation. She owns a thriving accounting practice based in Pennsylvania and is deeply embedded in the farming community both professionally and personally. Alongside her husband, Kelly manages a farm that raises various animals and crops, giving her first-hand experience with the unique financial intricacies faced by those in agriculture. Her diverse background combines a rich understanding of tax law with grassroots farming knowledge, making her a sought-after advisor for farm-related financial matters.
Episode Summary:
Join us for Episode 121 of the Teaching Tax Flow podcast, where hosts John and Chris explore the world of agricultural taxation with returning guest Kelly Bender. Known for her dual expertise in accounting and farming, Kelly sheds light on the complexities of farm taxes, offering insights and practical advice for those navigating this niche. With her unique background, Kelly delves into topics like income recognition, special rules for livestock, and deductions associated with farming, all while engaging in a fun and lively discussion.
In this episode, listeners can expect an in-depth look at what constitutes a farm, the distinct accounting methods applicable to agricultural businesses, and the difference between hobby farms and commercial farms. Kelly shares valuable knowledge about Schedule F filings, income averaging opportunities, and how cash basis accounting applies uniquely in the farming world. Moreover, the conversation touches on the broader economic implications of farming, such as local tax incentives, grants, and credits available to farmers. Throughout the discussion, the trio offers a blend of humor and expertise, ensuring an engaging and informative session on farm taxes.
Key Takeaways:
- Understanding Farming for Tax Purposes: Farming involves producing raw agricultural products without significant processing, disqualifying items like apple pies from being considered farm products for tax purposes.
- Income Recognition Special Rules: Kelly highlights the unique income recognition rules and opportunities for income averaging that give farmers flexibility, especially when dealing with the uncertainties of farming.
- Equipment and Livestock Depreciation: The conversation covers the significant tax implications of investing in farm equipment and livestock, including depreciation options and cash flow management.
- Eligibility and Benefits: Farmers can explore various benefits, such as estimated tax payment timing, qualifying deductions without rigorous substantiation, and special rules for livestock losses and spoilage.
- Farming Beyond Taxes: Beyond federal tax rules, local benefits such as property tax reductions and credits for beginning farmers play an essential role in supporting the agricultural economy.
Notable Quotes:
- "Farming takes a ton of time. It's not unusual for farmers to plant something and then wait years to see the income." - Kelly Bender
- "You grow some level of product that is raw and not manipulated for final consumption." - Kelly Bender
- "You can income average with farming, which is huge because of how variable it is year-to-year." - Kelly Bender
- "With farming, you don't have to keep track of inventory as you would with a regular business." - Kelly Bender
- "Farmers can deduct 75% of their vehicle expenses without the need for intense documentation." - Kelly Bender
- (00:02) - Exploring Farm Tax and Agricultural Business with Kelly Bender
- (05:42) - Exploring the Complexities and Costs of Modern Farming
- (09:38) - Tax Strategies and Income Averaging for Farmers
- (14:04) - Understanding Farming Income, Inventory, and Qualification Criteria
- (16:27) - Home Office Deductions for Farmers Explained
- (18:09) - Unique Rules and Considerations for Livestock Accounting
- (20:33) - Tax Benefits and Challenges for Farmers
- (25:00) - Challenges and Opportunities in Sustainable Farming Practices
- (27:12) - Exploring Tax Benefits and Challenges for Farmers
- (31:14) - Transforming an Old Church into a Unique Office Space
- (32:10) - Exploring Humor and Insights in Dairy Farming and Taxes
