publication archive: Gary Hoff
May 15, 2013
Keeping the Family Informed: Estate and Succession Planning
A prior article, "Updating your Estate and Succession Plan" discussed why a prior estate plan might not produce the results you expected due to law changes. This article discusses the reaction your heirs might have if they only learn of your plans at the reading of the will.Posted by Gary Hoff Permalink Tweet
May 8, 2013
Updating your Estate and Succession Plan
The American Taxpayer Relief Act of 2012 (ATRA) addressed many of the tax issues concerning taxpayers. ATRA made permanent many of the tax provisions that were scheduled to expire. For example, it provided a permanent exemption amount for the alternative minimum tax (AMT) and, more importantly, it indexed it for inflation.Posted by Gary Hoff Permalink Tweet
April 11, 2013
Have Not Filed Your Return Yet?
While April 15 is rapidly approaching, if you have not filed your federal or state income tax return, you should not panic. You can file for an automatic 6-month extension of time to file. This will make your return due on October 15. Individuals file for an extension for a number of reasons.Posted by Gary Hoff Permalink Tweet
March 20, 2013
Current Estate Law
There have been questions raised regarding how to plan an estate with the new law enacted as a part of the American Taxpayer Relief Act of 2012 (ATRA). There has been a lot of coverage on the income tax aspects of the new law, but not much has been written on the estate tax aspects.Posted by Gary Hoff Permalink Tweet
January 2, 2013
IFES 2012: Crop Insurance - Tax Reporting Options
Listen to MP3 podcastApproximately 80% of Illinois farmers purchased various types of crop insurance on their 2012 crops. The total premiums for these policies were over $770 million. It is projected that the total claims will exceed twice the amount of the premiums.
Posted by Gary Hoff Permalink Tweet
September 19, 2012
Illinois Farm Disaster Areas
U.S. Secretary of Agriculture Tom Vilsack has declared all but four Illinois counties as disaster areas due to the 2012 drought. Those counties not in the disaster area are Cook, DuPage, Kane, and Will. When thinking about a disaster, a casualty loss deduction normally comes to mind. Unfortunately, this is not the case for a drought. Even though the consequences of a drought can be devastating, normally it is not considered a disaster eligible for a casualty loss deduction.Posted by Gary Hoff Permalink Tweet
July 18, 2012
IRS Shows No Mercy
When your tax preparer tells you that you must meet the "letter of the law" in a transaction, you should heed their warning.Posted by Gary Hoff Permalink Tweet
May 3, 2012
Tax Credit Available for Hiring Veterans
Farmers who plan to add additional help this year may want to consider hiring veterans. There is a substantial increase in the job pool as these individuals come back into the civilian workforce. As a further incentive, you may be eligible for a generous tax credit for hiring unemployed veterans. The credit can apply to seasonal employees if they work at least 120 hours.Posted by Gary Hoff and Carolyn J. Schimpler Permalink Tweet
April 4, 2012
IRS Grants Penalty Relief Due to MF Global Bankruptcy
In my March 22, 2012 blog, I suggested farmers consider making an estimated tax payment on January 15 of each year as a way to extend their filing deadline to April 15 and still avoid the penalty for failing to make estimated payments. One example I gave for needing a post-March 1 filing was the late issuance of 1099 forms by MF Global trustees. Evidently, the IRS is aware of the problem and issued news release IR-2012-37 on March 23, 2012 to address the possible penalty problem.Posted by Gary Hoff Permalink Tweet
March 22, 2012
Should You File an Estimated Income Tax Return?
Did meeting a March 1 filing deadline give you heartburn this year? If yes, there is something you can do about it. Some farmers are under the erroneous idea that all farm tax returns are due on March 1. This is a misconception. Individual calendar year taxpayers have an April 15 deadline. However, if they owe income tax, they may be subject to a penalty for underpayment of estimated taxes. Farmers have a special provision that allows them to avoid this penalty if they file their return by March 1. There is also another provision that they may use.Posted by Gary Hoff Permalink Tweet
March 9, 2012
Independent Contractor or Employee?
Many farmers do not want the burden of withholding payroll taxes on part-time help. Consequently, they classify these individuals as independent contractors. Therefore, the farmer or rancher only needs to file a Form 1099-MISC if the individual is paid over $600 per year. Upon close inspection, the IRS would probably classify many of these individuals as employees. If this is the case, the IRS could impose some severe penalties on the employer. However, the IRS has a new program that can substantially reduce the amount of withholding tax and penalties that can be assessed.Posted by Gary Hoff Permalink Tweet
February 3, 2012
IRS Makes Changes to Schedule F
When you prepare to file your 2011 farm income tax return, you will find the Internal Revenue Service has made some major changes in the 2011 Form 1040 Schedule F. It is important to understand these changes.Posted by Gary Hoff Permalink Tweet
December 21, 2011
2011 IFES: Estate Planning in Uncertain Times
Listen to MP3 podcastThe Economic Growth and Tax Relief Reconciliation Act of 2001 made major changes in estate planning. It increased the federal estate tax exclusion over a nine year period and eliminated the estate tax completely for deaths in 2010. While planners never thought the repeal would occur, it did.
Posted by Gary J. Hoff Permalink Tweet
December 2, 2011
You Could Have a Partnership
Because the size of farming operations has grown, many farmers have entered into agreements with other farmers or family members. For convenience sake, they treat these operations as joint ventures. Each party files their own Schedule F. Each reports their share of income and expense. They each report their share of depreciation of jointly owned equipment on their individual depreciation schedules. However, the IRS could determine that this was not a joint venture but a partnership. Consequently, partnership tax rules come into play.Posted by Gary J. Hoff Permalink Tweet
December 1, 2011
Are You Looking for an Answer to Your Farm Tax Questions?
Do you need information on who qualifies as a farmer or rancher, when is a farm loss a hobby loss, how weather related livestock sales are treated or a multitude of other farm specific questions? If so, go to a recent website www.ruraltax.org.Posted by Gary J. Hoff Permalink Tweet
October 5, 2011
Charitable Contributions of Grain
Many grain farmers are anticipating unusually high income tax liabilities when they file their 2011 tax return. Even if they did not have a bumper crop, grain prices have been well above normal for the year. If a farmer is charitably minded, this would be a good year to consider making a donation of grain to their favorite church or charity. The tax advantages of donating commodities far outweigh those for a contribution of cash.Posted by Gary Hoff Permalink Tweet
September 22, 2011
Medical Reimbursement Deduction
The Tax Appeals court ruled in favor of the taxpayer in an IRC §105 medical reimbursement plan case. IRC §105 is a deduction the IRS carefully scrutinizes upon audit. It is imperative farmers participating in these plans review the plan requirements and follow them carefully.Posted by Gary Hoff Permalink Tweet
August 17, 2011
Tax on Sale of Residence
You may have received an email telling you that if you sell your house after 2012, you will pay a 3.8% sales tax. This message has gone viral and has reached millions of taxpayers. While it may be true for some, the tax will only affect a small number of taxpayers.Posted by Gary Hoff Permalink Tweet
August 10, 2011
Time to Review Your 2011 Tax Situation
Before you get into the field for harvest, you should take a few minutes to review your income tax situation. Many Illinois farmers experienced excellent yields in 2010 and were able to sell their crops at a high price. Consequently, it does not matter what the 2011 yield is; 2011 will be a year that can create a huge income and self-employment tax liability. In addition, the 2% increase in Illinois state income tax will also take another bite out of your profit. Unless you plan, you could miss out on possible deductions or be required to recognize more income than you expected.Posted by Gary Hoff Permalink Tweet
June 17, 2011
Tax Deferral of Prevented Planting Payments
Because of the wet spring, many Midwest farmers are considering whether to apply for prevented planting payments from their crop insurance carrier. This is making the farmers wonder if the prevented planting payments qualify for a tax deferral.Posted by Gary Hoff Permalink Tweet
April 14, 2011
Estate Tax Portability Election: Congress Expands the Federal Estate and Gift Tax Exemptions for Two Years
2010 was the year there was no federal estate tax. However, along with that, we were limited in the amount of available step-up in the basis of inherited assets. An estate was limited to a $1.3 million step-up unless the assets went to the spouse and then a $3 million step-up was available. The other assets were inherited with a carry-over basis. For example, assume the decedent paid $19,000 for land in 1920, but it is worth $800,000 at the time of death. The heir to the property would only receive a $19,000 basis. Consequently, if they sell the property for $800,000, they will recognize a $781,000 taxable gain.Posted by Gary Hoff Permalink Tweet
April 6, 2011
Congress Repeals Recent Legislation That Would Have Placed a Tremendous Burden on Farmers and Land Owners
On April 5, 2011, Congress repealed two recent laws. One of the laws, enacted with the 2010 Health Care Bill, increased 1099 reporting to include property purchases as well as service purchases. It also required reporting payments to corporations as well as individuals. The new bill is a complete repeal of the provision in the Health Care bill. Although the additional 1099 reporting was not to begin until 2013, for payments made after December 31, 2011, farmers and businesses were very concerned about the time and cost of complying with the law.Posted by Gary Hoff Permalink Tweet
March 22, 2011
Self-Employed Health Insurance
Don't miss this 2010 tax savings opportunity. The self-employed individual that pays for health insurance can reduce their self-employment tax due to a tax law change.Posted by Gary Hoff Permalink Tweet
