Cattle tax deductions and other credits have the potential to save you more money than you realize. When you’re a farmer, you know that profit margins are already slim. There are some deductions that can help you make the most of your business, but knowing which are available can be a time-consuming job in and of itself.
Not all farmers can get all the possible deductions, of course, but it’s important to know which breaks are out there and how to qualify for them to maximize your income. You may even be able to make a few changes throughout the year so you can get the deductions next year. This ensures you’re treating your farm like a business and making the most of the latest tax codes.
What Is a Cattle Tax Deduction?
A cattle tax deduction is designed to help you save money when you file taxes, and was created by the Internal Revenue Service (IRS) to ensure farmers have incentives for their businesses. The cattle industry is critical to the United States, after all.
There are a few different deductions to explore, depending on what you do with your cattle. These include:
If you’re purchasing cattle for the purposes of resale, you’ll need to include them in your inventory just as you would any other farm equipment that’s needed to help you do your job. The Farmer’s Tax Guide from the IRS can be overwhelming to read, but it will tell you more about cattle tax deductions based on your various farm supplies and how you use them.
As you explore the various tax deductions, it’s also important to keep your farm designated as an actual business as opposed to being labeled as a “hobby farm.”
How Do You Claim a Cattle Tax Deduction?
IRS Publication 225
5 Other Tax Breaks Available to Farmers
Advantage 1: Property Tax Deductions
Advantage 2: REAP Program
The Rural Energy for America Program (REAP) is a way for you to explore making your farm more energy efficient. The program is run by the U.S. Department of Agriculture (USDA) and makes it possible to afford upgrades and improvements.
Both grants and loans are available, but you cannot have any outstanding debt, judgments, or delinquent federal taxes to qualify. Further, you must work as a small business owner in an un-urbanized area or make at least 50% of your gross income from agricultural operations.
Advantage 3: Net Operating Loss
Advantage 4: Conservation Easement
Advantage 5: Retirement Plans
Explore Your Cattle Tax Deductions Today
It’s important to take a good look at what happens on your farm to ensure you’re taking advantage of all the tax breaks that are available to you. While you may know about the basic deductions for your land, you may be missing out on important cattle tax deductions.
The team at Silver Tax Group has the expertise to guide you through the various deductions you may qualify for. Contact us today to ask questions and find out how one of our experts can help you with your cattle tax deductions and other tax-related concerns.