If you earn money managing or working on a farm, you are in the farming business. Farms include plantations, ranches, ranges and orchards. Farmers may raise livestock, poultry or fish, or grow fruits or vegetables. Here are 10 things about farm income and expenses that the IRS wants you to know.

  1. Crop insurance proceeds. Insurance payments from crop damage count as income. They should generally be reported the year they are received.
  2. Deductible farm expenses. Farmers can deduct ordinary and necessary expenses as business expenses. An ordinary farming expense is one that is common and accepted in the farming business. A necessary expense is one that is appropriate for that business.
  3. Employees and hired help. You can deduct reasonable wages you paid to your farm's full and part-time workers. You must withhold Social Security, Medicare and income taxes from your employees' wages.
  4. Items purchased for resale. If you purchased livestock and other items for resale, you may be able to deduct their cost in the year of the sale. This includes freight charges for transporting livestock to your farm.
  5. Repayment of loans. You can only deduct the interest you paid on a loan if the loan proceeds are used for your farming business. You cannot deduct interest on a loan used for personal expenses.
  6. Weather-related sales. Bad weather may force you to sell more livestock or poultry than you normally would. If so, you may be able to postpone reporting a gain from the sale of the additional animals.
  7. Net operating losses. If deductible expenses are more than income for the year, you may have a net operating loss. You can carry that loss over to other years and deduct it. You may get a refund of part or all of the income tax you paid for past years, or you may be able to reduce your tax in future years.
  8. Farm income averaging. You may be able to average some or all of the current year's farm income by spreading it out over the past three years. This may lower your taxes if your farm income is high in the current year and low in one or more of the past three years. This method does not change your prior year tax. It only uses the prior year information to figure your current year tax.
  9. Fuel and road use. You may be able to claim a tax credit or refund of federal excise taxes on fuel used on your farm for farm work.
  10. Farmers Tax Guide. More information about farm income and deductions is in Publication 225, Farmer's Tax Guide. You can download it at IRS.gov, or call the IRS at 800-TAX-FORM (800-829-3676) to have it mailed to you.

TaxACT Free Federal Edition guides you through farming-related tax topics while completing Schedule F and other appropriate tax forms for you. If you need help along the way, get answers in the Answer Center, online at www.taxact.com or from TaxPayer Support Specialists via email. Start your free federal return now.

Additional IRS Resources:

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Upcoming Tax Dates

April 11 — Employees who work for tips
If you received $20 or more in tips during March, report them to your employer. You can use Form 4070.

April 12 — Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the first 15 days of March.

April 14 — Regular method taxes
Deposit the tax for the last 16 days of March.

April 18 — Individuals
File a 2015 income tax return (Form 1040, 1040A, or 1040EZ) and pay any tax due. If you want an automatic 6 month extension of time to file the return, file Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return. For more information, see Form 4868. Then, file Form 1040, 1040A, or 1040EZ by October 17.

April 18 — Individuals
If you are not paying your 2016 income tax through withholding (or will not pay in enough tax during the year that way), pay the first installment of your 2016 estimated tax. Use Form 1040ES.

April 18 — Household Employers
If you paid cash wages of $1,900 or more in 2015 to a household employee, you must file Schedule H - Details

April 18 — Partnerships
File a 2015 calendar year return (Form 1065) - Details

April 18 — Partnerships
Electing large partnerships: File a 2015 calendar year return (Form 1065-B) - Details

April 18 — Corporations
Deposit the first installment of estimated income tax for 2016 - Details

April 18 — Social security, Medicare, and withheld income tax
If the monthly deposit rule applies, deposit the tax for payments in March.

April 18 — Nonpayroll withholding
If the monthly deposit rule applies, deposit the tax for payments in March.

April 18 — Household employers
If you paid cash wages of $1,900 or more in 2015 to a household employee, you must file Schedule H (Form 1040). If you are required to file a federal income tax return (Form 1040), file Schedule H (Form 1040) with the return and report any household employment taxes. Report any federal unemployment (FUTA) tax on Schedule H (Form 1040) if you paid total cash wages of $1,000 or more in any calendar quarter of 2014 or 2015 to household employees. Also, report any income tax you withheld for your household employees.

April 27 — Communications and air transportation taxes under the alternative method
Deposit the tax included in amounts billed or tickets sold during the last 16 days of March.

April 29 — Regular method taxes
Deposit the tax for the first 15 days of April.

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