Tax filing deadline is March 1 for farmers

Farmers and ranchers have until March 1, 2022 to file their 2021 tax return without penalty if they have not made estimates.

“Growers have until April 15 to file without penalty if they paid their estimated tax before January 15,” says Ron Haugen, agricultural economist at North Dakota State University Extension. (NDSU).

Things to note for 2021 income tax preparation:

  • The standard deduction is $25,100 for those who are married and filing jointly and $12,550 for singles.
  • The Social Security salary base for 2021 is $142,800.
  • The standard mileage rate for 2021 is 56 cents per mile.
  • Producers are permitted to use 200% declining balance depreciation for 3-year, 5-year, 7-year and 10-year assets. The 150% declining balance method is still required for 15 and 20 year old assets.
  • For most new agricultural machinery and equipment (except grain silos), the payback period is 5 years.
  • Like-kind exchanges are not permitted for personal property, but are permitted for real estate.
  • The Section 179 expense allows producers to deduct up to $1,050,000 on new or used machinery or equipment purchased during the tax year. There is a dollar-for-dollar phase-out for purchases over $2,620,000.
  • The additional amortization premium of 100% in the first year is in effect. It is available for used and new goods. It is equal to 100% of the adjusted base after any expenditure under section 179.
  • Income averaging can be used by producers to distribute tax payable to lower income tax brackets over the previous three years. This is done on Schedule J. Farmers in North Dakota who choose to use income averaging for federal purposes can also use Form ND-1FA, which is Income Averaging for Federal Purposes Calculations. North Dakota income tax.
  • Crop insurance proceeds and government farm disaster payments can be carried forward to the next tax year if a producer is a cash taxpayer and can demonstrate that, normally, income from damaged crops would be included in a tax year following the year of the damage.
  • Livestock income deferral is available for those who have experienced a forced sale of livestock due to a weather-related disaster. The IRS has two provisions for deferral. The first is IRC 1033(e) in which a breeder who sells more draft, breeding or dairy animals than normal due to weather conditions can defer recognition of earnings for up to two years. A disaster declaration is not required, but if there is a federal disaster declaration, the replacement period is four years. The second provision is IRC 451(g) in which a livestock producer using the cash method may elect to defer income from any qualifying livestock sold due to weather conditions for one tax year.

Information on farm tax topics can be found in the “Farmers Tax Guide,” publication 225. It is available at any IRS office or can be ordered by calling 800-829-3676. Any questions on these topics or other updates should be directed to your tax professional or the IRS at 800-829-1040 or https://www.irs.gov. Call the North Dakota Tax Department at 877-328-7088 or go to http://www.nd.gov/tax for answers to North Dakota income tax questions.

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