GREAT FALLS - There's no question that farmers and ranchers have faced many challenges in 2021. From drought, grasshoppers, fire, and more, agriculture producers are looking forward to closing the chapter on this year.
As the end of the year draws near, there are several important tax provisions agriculture producers should be aware of for the tax year, according to CPA Dana Springer with Wipfli CPA and Consultants.
“2021 has been a roller coaster of a year with potential tax law changes that might be coming or might not be coming,” said Springer. “The sooner farmers can get in and talk to their advisors the better.”
During the Montana Grain Growers convention in Great Falls last week, Dana Springer shared important tax information with producers, including crop insurance-related items.
“We've been getting a lot of questions on crop insurance and what they can do with the payments that they're receiving,” said Springer. “Because they're getting those checks before the end of the year."
"They need to know that they can defer those if it's to the loss of production. That's just an election that we make on the tax return. There's nothing that they must do now other than get some reports from their insurance agent to make sure we know if it's loss of production or if its Revenue Insurance.”
Springer also reminds ag producers and businesses of ag research and development (R & D) tax credits for those working to develop new or improved practices.
“For farmers, if they're doing anything new or different, there is a credit that they can get on top of those expenses that they're already paying for. It's some great tax savings for people who are trying some different crops.”
As a result of the drought, many ranchers across the state have made the difficult decision to reduce the size of their cattle herds. Springer shared a few tax options one can consider.
“There's some good deferral options for livestock,” explained Springer. “You can just defer the income to next year if there were excess sales. There are also some options for breeding livestock where you have with the disaster designations. You actually have four years to replace those livestock. So, you don't necessarily have to take that income this year. And again, those are elections that we get to make on the tax return. You just have to make those decisions before next spring.”
For any questions on these important topics contact your local tax expert.
