2009 ag income tax update for farm families available
For tax years 2009 and 2010, there are a number changes that have resulted from the passage of federal tax laws. These changes can dramatically affect farm families, their farm business and the management of their tax planning.
Section 179 depreciation and bonus depreciation have been extended for the 2009 and 2010 tax years. One challenge here is that the State of Minnesota has not adopted the federal Section 179 and bonus depreciation provisions so additional planning is needed.
New for 2009 is a mandatory five-year recovery of depreciation on all new farm machinery placed into service in 2009. This provision replaces the seven-year recovery period for new machinery but still applies to used machinery.
Other farm business tax changes involve wind generator tax issues, income averaging for farmers, net operating loss carry-back calculations, dairy herd retirement program payment issues, and changes to how commodity futures and options contract proceeds are calculated for tax purposes. Tax rates, deduction amounts and phase-out amounts have changed for 2009 and 2010 as well.
In addition to farm business tax changes, there have been several individual and family tax law changes as well.
Some of those include new rules regarding the "Kiddie tax," first-time home buyer rules, new car deduction, "Cash for Clunkers" tax calculations, and some changes to retirement and learning tax credits.
If farm families have questions regarding any of the ag tax law changes they can get a free copy of the publication titled "Ag Income Tax Update for Farm Families" from University of Minnesota Extension's Agricultural Business Management website at www.extension.umn.edu/AgBusinessManagement.