Tax management program for agriculture producers set

On Tuesday, November 14 from 1-4 p.m., a tax program will be offered to area farmers and ag producers.

Posted 11/2/17

By Lisa Nowatzki

The event is sponsored by the North Dakota State University Extension Service and Internal Revenue Service.

Included with the three-hour presentation are four question and answer sessions. The lecture will be given via an interactive video at ten sites around the state including Langdon.

Featured speakers and presenters include Alan Gregerson, Senior Stakeholder Liaison Specialist, Communication and Liaison Division of the Internal Revenue Service (IRS); Judy Gilbertson, Senior Tax Specialist, AgCountry Farm Credit Services, Jamestown; Jess Nehl, Tax Manager, Eide Bailly LLP, Bismarck, ND; Kelda Rerick, Certified Public Accountant, Haga Kommer, Bismarck, ND; and Brent Roeder, Senior Tax Manager, Eide Bailly LLP, Fargo, ND.

According to Andrew Swenson of NDSU, the topics up for discussion are: Federal Income Tax Update, IRS Update, New Federal Income Tax Legislation, Drought Forced Livestock Sales, Research and Development Tax Credits, Tax Management Upon  Retirement, Transition Strategies from a C Corp. to a S Corp., ND Farm Resident Property Tax Exemption, MN Beginning Farmer Tax Credit, ND Ag. Processing Facility Investment Tax Credit, and  Managing Taxable Farm Income.

Some of the new federal income tax updates include an increase in standard deductions and personal exemptions, itemized deductions being reduced by three percent according to the adjusted gross income, and the child care credit being phased out in the upper income brackets.

Speakers will also cover estimated tax payments and the alternative minimum tax exemption amount, which is 26 percent up to $187,800, and 28 percent for income over $187,800. Long and short-term capital gains and qualified dividend rates will also be covered.

Another update discussed will be the Surtax on net investment income is 3.8 percent. This includes interest, dividends, capital gains, annuities, royalties, rents and pass-through income from a passive business such as an S-Corp or Partnership.

With the taxable Social Security benefit, the Tax On Base has increased. Education credits and deduction have also changed. Some deductions on the joint application have changed. The group will also cover the additional Medicare tax of .9 percent.

Swenson also said that the panelists will talk about a multitude of tax information including the proper calculation of filing of estimated tax payments and the Affordable Care Act requirements for 2017.

Also covered with the IRS are new Federal Income Tax Legislations. According to Swenson and the IRS, the presentation will cover IRS changes based on President Trump’s tax simplification plan.

“The President has laid out four principles for tax reform. First, make the tax code simple, fair and easy to understand. Second, give American workers a pay raise by allowing them to keep more of their hard-earned paychecks. Third, make America the jobs magnet of the world by leveling the playing field for American businesses and workers. Finally, bring back trillions of dollars that are currently kept offshore to reinvest in the American economy,” explained.

The program will also cover drought forced livestock sales. Based on the preliminary information provided by the IRS, producers will have the option to defer the livestock income until next year or purchase replacement livestock within four years from the end of the tax year.

Research and development tax credits are also on the table for discussion. Eligible farmers can claim credit for increasing research spending. Credits benefit taxpayers who design and manufacture tangible or intangible products, for sale or for their own use.

The group will discuss tax management upon  retirement strategies, along with benefits of a charitable remainder trust. This allows the tax-free sale of assets, with the donor receiving income during the donor’s lifetime and the remainder paid to the charity upon termination of the trust.

The benefits of transition strategies from a C Corp. to a S Corp. will be discussed. The program will offer strategies and tips related to changing from one to another type of corporation.

ND farm resident property tax exemption will be discussed. According to the IRS, a residence is exempt if it is situated on a farm and is occupied or used by an individual who is a farmer. It need not be owned by the farmer. The IRS furthers states that a residence is not exempt if it is located on a tract or contiguous tract of agricultural land, whether owned or rented, containing less than 10 acres.

For producers and growers associated with the state of Minnesota, the beginning farmer tax credit is part of the program. This tax credit is for the rent or sale of farm land or a variety of farm assets to beginning farmers. Some of the qualifications for this credit include: MN resident entering or has entered farming within the last 10 years, not directly related to the owner of the agricultural asset,” and net worth limitations.

ND agricultural processing facility investment tax credits are part of the program, also. According to one IRS publication, an investment in an Agricultural Commodity Processing Facility qualifies for a 30 percent ND tax credit.

Managing taxable farm income has quite a few discussion points: the potential deductions, credits, tax bracket management or even reducing your deferred tax liability are all considerations that will be addressed.

Other topics include standard mileage deductions, estate and trust income tax rates, and a multitude of Social Security information. Individual Retirement Accounts including new limits and 2018 changes will also be made available. Finally, the program has a few tips on managing taxable income in the year to come.

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