Farming isn’t easy. It’s a seven-days-a-week job that requires a diverse set of skills, long hours, and some luck with the weather. It’s with this in mind that the National Farm Income Tax Extension Committee recently created RuralTax.org, an online tool that provides agricultural producers with a source for agriculturally related income and self-employment tax information that is both easy to understand and continually updated to reflect changes in tax laws.
The Committee has a 50-plus year history of working with the IRS to edit Publication 225: The Farmer’s Tax Guide. It’s comprised of representatives from more than 12 land-grant universities around the country, who realized the need to partner with USDA’s Risk Management Agency (RMA) to provide more information for farmers about Federal taxes. We at RMA are dedicated to providing useful tools for farmers to access crucial information and are proud to have provided support for the website.
The intent of RuralTax.org is not to help farmers prepare their own tax returns, but instead to help them learn about IRS requirements so they can be informed in decisions about their self-employment and income taxes. For example, self-employment tax is 15.3% of income from self-employment like farming. This is equivalent to both the employee’s portion that is held out of a paycheck and employer’s match. Since this is not withheld while they are earning it, it can often be bigger than a beginning farmer’s income tax obligation. If producers are not expecting it, it can create financial strain on their operation.
RuralTax.org includes 20 peer-reviewed fact sheets on such topics as the IRS’ definition of a farmer, hobby loss rules and 1099 information returns. It also includes a sample federal income tax return including line by line explanations of a farming example.
This website is a great start and the committee plans to continue to improve and expand it over time so that producers can manage Tax Season as well as they would any other. Comments are welcomed at firstname.lastname@example.org.