While farmers hate to pay taxes just like anyone else, I often see situations where they pay more than they should. This is usually due to poor tax planning. The farmer who fairs the best under IRS rules is one who considers the tax implications of everything he/she does.

Most of us don’t think about income tax until the April 15 deadline is approaching. As you prepare your 2011 return take note of things that could have been done to reduce your tax liability. With those notes, plan your tax strategy for this year. Toward the end of the year, take a look at your anticipated income. If taxable income is higher than expected, you might make some advance purchases to offset income. If taxable income is lower than expected, you might consider selling some stock or timber as your taxes would be lower than in a high income year.

We have an ample supply of the Farmer’s Tax Guide available at the County Extension Office. This publication explains how the federal tax laws apply to farming. The publication can be used as a guide to figure your taxes and complete your farm tax return. If you need more specific information on any subject, you can get the specific IRS tax publication covering that subject. Many of these free publications are referred to throughout the Farmer’s Tax Guide. There are toll free numbers one can call to request publications and forms from the IRS but the closer you wait till the deadline the harder it will be to get through on these numbers.

Many farmers like to use a farm record book produced by Extension for keeping up with all their income and expenses. The record book is formatted in a way that assists you in completing your tax return. We try to keep a good supply of these available at all times.

It’s not too soon to start planning for your 2012 tax return. Thinking about tax liabilities during the current year allows you to make necessary adjustments to income or expenses as needed.