Ten Tax Tips For Farmers And Ranchers

Farms include ranches, ranges and orchards. Some raise livestock, poultry or fish. Others grow fruits or vegetables.

Individuals report their farm income on Schedule F, Profit or Loss From Farming.

If you own a farm, here are 10 tax tips to help at tax time:

1.  Crop insurance.  Insurance payments from crop damage count as income. Generally, you should report these payments in the year you get them.

2. Sale of items purchased for resale.  If you sold livestock or items that you bought for resale, you must report the sale. Your profit or loss is the difference between your selling price and your basis in the item. Basis is usually the cost of the item. Your cost may also include other amounts you paid such as sales tax and freight.

3. Weather-related sales.  Bad weather such as a drought or flood may force you to sell more livestock than you normally would in a year. If so, you may be able to delay reporting a gain from the sale of the extra animals.

4. Farm expenses.  Farmers can deduct ordinary and necessary expenses they paid for their business. An ordinary expense is a common and accepted cost for that type of business. A necessary expense means a cost that is proper for that business.

5. Employee wages.  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 their wages.

6. Loan repayment. You can only deduct the interest you paid on a loan if the loan is used for your farming business. You can’t deduct interest you paid on a loan that you used for personal expenses.

7. Net operating losses.  If your 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 in prior years. You may also be able to lower 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 cut your taxes if your farm income is high in the current year and low in one or more of the past three years.

9. Tax credit or refund.  You may be able to claim a tax credit or refund of excise taxes you paid on fuel used on your farm for farming purposes.

10. Farmers Tax Guide.  For more details on this topic see Publication 225, Farmer’s Tax Guide. You can get it on IRS.gov/forms anytime. You can order it on IRS/orderforms to have it mailed to you.

Additional IRS Resources:

• Schedule F, Profit or Loss From Farming
• Agriculture Tax Center
• Small Business and Self-Employed Tax Center
• IRS Free File
• E-file Options
• Filing Your Taxes
• Interactive Tax Assistant
• IRS Tax Map

IRS YouTube Video:

• Welcome to Free File – English

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Register Now To Attend The Small Business Summit At The Shell Houston Open

Learn how to successfully market your small business, at no cost to you.  Join the Houston District Office SBA partners: SCORE and SBDC, as they provide information to help you start and grow your small business.  Registration, Continental Breakfast and Networking begin at 9 am.

This is an interactive summit filled with information and a Q & A session.  Don’t miss the chance to talk one-on-one with SCORE and the SBDC staff, while learning to successfully market your small business.

Seating is limited and registration is required

When:     Tuesday, March 31, 2015
                9:00 am to 12:00 pm

Where:    Champions Pavilion - Golf Club of Houston
                 5860 Wilson Rd
                 Humble, TX 77396

To register and for more information click the registeration link: 

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SBA offers a variety of programs and services. Understanding how SBA works is the first step towards receiving assistance. Whether you are just getting started or you are an existing business ready to expand, you will learn about our loan programs and how our resource partners, SBDC, SCORE, and WBC can help.

Visit the Houston District website calendar for upcoming workshops and events.
www.sba.gov/tx/houston

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Top Eight Tax Tips About Deducting Charitable Contributions

When you give a gift to charity that helps the lives of others in need. It may also help you at tax time.

You may be able to claim the gift as a deduction that may lower your tax.

Here are eight tax tips you should know about deducting your gifts to charity:

1. Qualified Charities.  You must donate to a qualified charity if you want to deduct the gift. You can’t deduct gifts to individuals, political organizations or candidates. To check the status of a charity, use the IRS Select Check tool.

2. Itemized Deduction.  To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with your federal tax return.

3. Benefit in Return.  If you get something in return for your donation, your deduction is limited. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.

4. Donated Property.  If you gave property instead of cash, the deduction is usually that item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market.

5. Clothing and Household Items.  Used clothing and household items must be in at least good condition to be deductible in most cases. Special rules apply to cars, boats and other types of property donations. See Publication 526, Charitable Contributions, for more on these rules.

6. Form 8283.  You must file Form 8283, Noncash Charitable Contributions, if your deduction for all noncash gifts is more than $500 for the year.

7. Records to Keep.  You must keep records to prove the amount of the contributions you made during the year. The kind of records you must keep depends on the amount and type of your donation. For example, you must have a written record of any cash you donate, regardless of the amount, in order to claim a deduction. For more about what records to keep refer to Publication 526.

8. Donations of $250 or More.  To claim a deduction for donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether the organization provided any goods or services in exchange for the gift.

Also refer to Publication 561, Determining the Value of Donated Property. You can get IRS tax forms and publications on IRS.gov/forms anytime.

Additional IRS Resources:

• Interactive Tax Assistant tool
• IRS Tax Map

IRS YouTube Videos:

• Fair Market Value of Charitable Donations - English | Spanish | ASL

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Business Owners-Entrepreneurs: Tips For Developing A Marketing Plan

Marketing takes time, money, and lots of preparation.  One of the best ways to prepare yourself is to develop a solid marketing plan. 

A strong marketing plan will ensure you’re not only sticking to your schedule, but that you’re spending your marketing funds wisely and appropriately.

What can a Marketing Plan do for Your Small Business?

A marketing plan includes everything from understanding your target market and your competitive position in that market, to how you intend to reach that market (your tactics) and differentiate yourself from your competition in order to make a sale.
Your small business marketing budget should be a component of your marketing plan. Essentially, it will outline the costs of how you are going to achieve your marketing goals within a certain timeframe.

If you don't have the funds to hire a marketing firm or even staff a position in-house, there are resources available to guide you through the process of writing a marketing plan and developing a market budget.

Bend Your Budget When Necessary and Keep an Eye on ROI

Once you have developed your marketing budget, it doesn’t mean that it’s set in stone. There may be times when you need to throw in another unplanned marketing tactic -- such as hosting an event or creating a newspaper ad -- to help you reach your market more effectively.

Ultimately, it’s more important to determine whether sticking to your budget is helping you achieve your marketing goals and bringing you a return on investment (ROI) than to adhere to a rigid and fixed budget.

That's why it's important to include a plan for measuring your spend. Consider what impact certain marketing activities have had on your revenues during a fixed period, such as a business quarter, compared to another time period when you focused your efforts on other tactics. Consider the tactics that worked as well as those that didn’t work. You don't have to cut the tactics that didn't work, but you should assess whether you need to give them more time to work or whether the funds are best redirected elsewhere.

Granted, some tactics are hard to measure -- such as the efficacy of print collateral (brochures, sales sheets, etc.), but you need to consider the impact of not having these branding staples in your market tool kit before you reign in your graphic design and print funds.

Marketing plans should be maintained on an annual basis, at a minimum. But if you launch a new product or service, take time to revisit your original plan or develop a separate campaign plan that you can add to your main plan as an addendum.

At the end of the day, the time spent developing your marketing plan, is time well spent because it defines how you connect with your customers. And that's an investment worth making.

Additional Resources

• SBA's Online Learning Center offers several resources to learn about marketing your business.
  

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Six Tips You Should Know About Employee Business Expenses

If you paid for work-related expenses out of your own pocket, you may be able to deduct those costs.

In most cases, you claim allowable expenses on Schedule A, Itemized Deductions.

Here are six tax tips that you should know about this deduction.

1. Ordinary and Necessary.  You can only deduct unreimbursed expenses that are ordinary and necessary to your work as an employee. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is appropriate and helpful to your business.

2. Expense Examples.  Some costs that you may be able to deduct include:    

• Required work clothes or uniforms that are not appropriate for everyday use.
• Supplies and tools you use on the job.
• Business use of your car.
• Business meals and entertainment. 
• Business travel away from home. 
• Business use of your home.
• Work-related education.

This list is not all-inclusive. Special rules apply if your employer reimbursed you for your expenses. To learn more, check out Publication 529, Miscellaneous Deductions. You should also refer to Publication 463, Travel, Entertainment, Gift, and Car Expenses.

3. Forms to Use.  In most cases you report your expenses on Form 2106 or Form 2106-EZ. After you figure your allowable expenses, you then list the total on Schedule A as a miscellaneous deduction. You can deduct the amount that is more than two percent of your adjusted gross income.

4. Educator Expenses.  If you are a K through 12 teacher or educator, you may be able to deduct up to $250 of certain expenses you paid for in 2014. These may include books, supplies, equipment, and other materials used in the classroom. You claim this deduction as an adjustment on your tax return, rather than as an itemized deduction. This deduction had expired at the end of 2013. A recent tax law extended it for one year, through Dec. 31, 2014. For more on this topic see Publication 529.

5. Keep Records.  You must keep records to prove the expenses you deduct. For what records to keep, see Publication 17, Your Federal Income Tax.

6. IRS Free File.  Most people qualify to use free, brand-name software to prepare and e-file their federal tax returns. IRS Free File is the easiest way to file. These rules can be complex, and Free File software will help you determine if you can deduct your expenses. It will do the math, fill out the forms and e-file your return – all for free. Check your other e-file options if you can’t use Free File.

Visit IRS.gov/forms to view, download or print IRS tax products anytime.

IRS YouTube Video:

• Welcome to Free File – English

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Five Key Points About Children With Investment Income

Special tax rules may apply to some children who receive investment income. The rules may affect the amount of tax and how to report the income.

Here are five key points to keep in mind if your child has investment income:

1. Investment Income.  Investment income generally includes interest, dividends and capital gains. It also includes other unearned income, such as from a trust.

2. Parent’s Tax Rate.  If your child's total investment income is more than $2,000 then your tax rate may apply to part of that income instead of your child's tax rate. See the instructions for Form 8615, Tax for Certain Children Who Have Unearned Income.

3. Parent’s Return.  You may be able to include your child’s investment income on your tax return if it was less than $10,000 for the year. If you make this choice, then your child will not have to file his or her own return. See Form 8814, Parents' Election to Report Child's Interest and Dividends, for more.

4. Child’s Return.  If your child’s investment income was $10,000 or more in 2014 then the child must file their own return. File Form 8615 with the child’s federal tax return.

5. Net Investment Income Tax.  Your child may be subject to the Net Investment Income Tax if they must file Form 8615. Use Form 8960, Net Investment Income Tax, to figure this tax. For more on this topic, visit IRS.gov.

Refer to IRS Publication 929, Tax Rules for Children and Dependents, for complete details on this topic. Visit IRS.gov/forms to view, download or print IRS forms and publications anytime.

Additional IRS Resources:

• Questions and Answers on the Net Investment Income Tax
• Filing Your Taxes
• IRS Tax Map

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SBA Announces Austin Emerging Leaders Initiative

Join the SBA for the first Austin Emerging Leaders Initiative, an intensive executive-level training series to accelerate the growth of high- potential small businesses. Developed by the U.S. Small Business Administration, and drawing on the experiences of advisors and business leaders in our area, this comprehensive curriculum provides the tools to catapult your company to the next level and help it emerge as a force in the Austin area.

WHO: The Emerging Leaders advanced training series is open to small business CEOs
whose companies:
• Have annual revenues of at least $400,000.
• Have been in business for at least 3 years.
• Have at least one employee (other than self).

WHEN: Classes will start on April 28, 2015. They will be held every other Tuesday from 4pm-7pm for a duration of 7 months.

WHERE: BiG Austin, 5407 N. IH35, suite 200, Austin, Texas

COST: The only costs are your time and commitment to complete the curriculum. All other costs are assumed by the U.S. Small Business Administration and local partners.

TO LEARN MORE: www.sba.gov/emergingleaders

CONTACT:  Ashley Morales, SBA Administrative Officer/ PIO ashley.morales@sba.gov or (210) 403-5903

****************DEADLINE TO REGISTER IS APRIL 03,2015*****************

<------ Click on the You Tube link to see a SBA presentation on Emerging Leaders.

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Seven Tax Tips About Reporting Foreign Income

Are you a U.S. citizen or resident who worked abroad last year? Did you receive income from a foreign source in 2014?

If you answered ‘yes’ to either of those questions here are seven tax tips you should know about foreign income:

1. Report Worldwide Income.  By law, U.S. citizens and residents must report their worldwide income. This includes income from foreign trusts, and foreign bank and securities accounts.

2. File Required Tax Forms.  You may need to file Schedule B, Interest and Ordinary Dividends, with your U.S. tax return. You may also need to file Form 8938, Statement of Specified Foreign Financial Assets. In some cases, you may need to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts. See IRS.gov for more information.

3. Review the Foreign Earned Income Exclusion.  If you live and work abroad, you may be able to claim the foreign earned income exclusion. If you qualify, you won’t pay tax on up to $99,200 of your wages and other foreign earned income in 2014. See Form 2555, Foreign Earned Income, or Form 2555-EZ, Foreign Earned Income Exclusion, for more details.

4. Don’t Overlook Credits and Deductions.  You may be able to take a tax credit or a deduction for income taxes you paid to a foreign country. These benefits can reduce your taxes if both countries tax the same income.

5. Use IRS Free File.  Almost everyone can prepare and e-file their U.S. federal tax returns for free by using IRS Free File. If you make $60,000 or less, you can use brand-name tax software. If you earn more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. Some Free File software products and fillable forms also support foreign addresses for those who live abroad. Free File is available only through the IRS.gov website.

6. Tax Filing Extension is Available.  If you live outside the U.S. and can’t file your tax return by April 15, you may qualify for an automatic two-month extension of time to file. That will give you until June 16, 2015, to file your U.S. tax return. This extension also applies to those serving in the military outside the U.S. You will need to attach a statement to your return explaining why you qualify for the extension.

7. Get IRS Tax Help.  Check the international services Web page for the types of help the IRS provides. For all free IRS tax tools and products, visit IRS.gov at any time.

For more on this topic refer to Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad. You can get all IRS tax products on IRS.gov/forms anytime.

Additional IRS Resources:

• Taxation of U.S. Resident Aliens
• Publication 514, Foreign Tax Credit for Individuals
• International Taxpayers

IRS YouTube Video:

• Welcome to Free File – English

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